A Nakumatt outlet in Nyali, Mombasa. FILE PHOTO | NMG
The Kenya National Chamber of Commerce and Industry (KNCCI) is
calling for information sharing between companies to avert business
risks.
The chamber’s Nairobi chapter said although
firms are naturally in competition, they should have joint mechanisms to
discuss risks that could irredeemably hurt them.
“They
should co-operate in information sharing, peer review and
self-regulation to warn them of potential pitfalls and minefields before
these translate to losses,” said Nairobi Chapter chairman Richard
Ngatia.
He spoke in the wake of financial tribulations
facing Nakumatt, which has been Kenya’s largest retail chain by number
of outlets.
Nakumatt now faces liquidation after the High Court last week threw out a petition seeking to appoint a receiver manager.
In
a better environment, creditors could have helped avert the current
challenges facing the supermarket. More than 50 companies have joined a
court petition seeking to declare the retailer insolvent.
Mr
Ngatia said had there been forums to share information on the
prevailing business environment, the debt woes facing Nakumatt could
have been avoided.
The retailer’s experience, he added, should serve as a lesson to
businesses to approach issues of mutual interest in a more structured
and regulated way.
The retail chain owes creditors
between Sh30 billion and Sh40 billion. Top creditors include dairy
company Brookside (Sh457 million), furniture distributor Redstar
International (Sh261 million), Kisima Management (Sh201 million), dairy
processor New KCC (Sh290 million), Kenindia Insurance (Sh167.2 million)
and Nexus Holdings (Sh103 million).
Others include Chania Veterinary Distributors (Sh97.9 million), Kevian (Sh90.2 million) and Haco Industries (Sh71.8 million).
“If
the creditors, who had first suffered the pain of non-payment, had
ventilated their frustrations within a structured institutional
framework, other businesses would have been more careful in dealing with
Nakumatt,” said Mr Ngatia.
Last week, the Competition
Authority of Kenya (CAK) halted the planned merger of Nakumatt Holdings
with Tuskys Supermarkets, saying Tuskys’ shareholders should first
resolve internal wrangles.
CAK said the objector, who
is a shareholder in Tusky’s Supermarkets, had raised issues relating to
ownership of the supermarket, its financial status and viability of the
intended transaction.
“It is prudent for Tuskys Supermarkets shareholders to resolve their disputes first,” said CAK.
But
Tuskys continues to take over shop space vacated by Nakumatt, with the
latest being in Kisii and Kisumu, adding to its network of 57 branches
in Kenya and seven in Uganda.
The
country’s supermarket sector is, however, among the most attractive for
long-term investors in sub-Saharan Africa, according to analysts at
financial advisory firm StratLink in their latest monthly update.
Besides Tuskys, South Africa retailer Shoprite is eyeing the business gap left by Nakumatt.
Mr
Ngatia noted that organisations that do not comply with statutory
regulations, apply minimum standards of corporate governance and honour
their contractual obligations must be flagged out at the earliest
opportunity.
“….so that anyone dealing with them
exercises extreme caution and otherwise takes measure to mitigate any
losses that may result from that engagement. It should be possible to
save the retailer and retain the value in the brand before it is too
late. This is an idea whose time has come,” he said.
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