Kenya has now asked troubled retailers Nakumatt and Uchumi to provide detailed analyses of their debt by the end of October.
The
two retailers, that had in the past few years expanded across the
region, have of late been straddled with debt of more than $180 million.
The
debt threatens to bring down a chain of small and medium enterprises in
Kenya, Uganda and Tanzania. Uchumi owes $3.8 million to Tanzanian
suppliers while Nakumatt owes its suppliers over $700,000.
Kenya’s
Trade Principal Secretary Dr Chris Kiptoo, while meeting his Tanzanian
counterpart a week ago, said the government had asked the two
supermarkets for a detailed debt analysis.
“We have
asked for these detailed debt analyses so that we can try and see what
to do to help them out. We would like to see them flourish, not just
here in Kenya but across the region,” Dr Kiptoo said.
Tanzania
indicated that it would support Kenya on the two retailers to safeguard
the interests of small and medium enterprises owed money by the
supermarkets.
“It is important for Kenya to assist
these firms, especially Nakumatt. Already, we have calculated that
Nakumatt owes its suppliers $704,881. It may seem like a small amount
compared with its debt in other countries but since the suppliers are
largely small scale producers, the debts mean a lot to them,” said Prof
Adolf Mkenda, Tanzania’s Permanent Secretary in the Ministry of
Industry, Trade and Investment.
The Nakumatt Tanzania
unit last November wrote to the Fair Competition Commission (FCC)
seeking to offload 51 per cent of its stake to Ascent Investment Ltd.
Recently,
Kenya’s Trade Cabinet Secretary Adan Mohammed called for patience among
suppliers and financiers of the two retailers, saying that the
government was working on a plan to support them.
“We are working with the retailers on how to repay these debts,” Mr Mohammed told a retail sector status meeting in his office.
Last
year, Uchumi closed business in Uganda without paying 800 workers and
suppliers and had filed a case for insolvency in Ugandan courts.
Uchumi
ceased its regional operations in 2015 by closing down 10 outlets —
four in Tanzania and six in Uganda following a prolonged period of
loss-making.
Shut down branches
The firm also shut down several branches in Kenya to curb financial bleeding.
Prior
to the closing of Tanzania and Ugandan subsidiaries, Uchumi had not
made any profit for over five years despite the branches accounting for
4.75 per cent of the firm’s operations.
During the meeting, Tanzania expressed concerns that Uchumi has failed to pay Tanzanian suppliers.
“Despite
several followup and communication efforts made by Tanzania High
Commission in Kenya, Julius Kipng’etich, chief executive of Uchumi
Supermarkets provided no tangible commitments and remains unresponsive
to the mentioned claims,” said Tanzania in a report of the
deliberations.
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