Kenya puts Tuskys on watch list

A cashier serves customers at Tuskys Supermarket outlet along Kenyatta Avenue in Nairobi, Kenya. The supermarket is under financial pressure to pay its suppliers. PHOTO | FILE | NATION MEDIA GROUP 

In Summary

• KAM whose members form the bulk of Tuskys’ suppliers said the retailer is facing debt payment challenges and is flouting the joint Prompt Payment Code of Practice that provides for payment of Fast Moving Consumer Goods (FMCG) within 30 days from the date of the invoice while other goods should be 45 days.
• In 2018, the once giant retailer in the region, Nakumatt, collapsed and entered into a voluntary administration to protect itself from creditors it owed over $300 million.
• And in January this year, creditors voted to liquidate the retailer, driving the final nail in the firm’s coffin. Another regional retailer, Uchumi Supermarkets, is in deathbed after failing to pay off creditors, among them suppliers, banks and workers.

By JAMES ANYANZWA
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The Kenyan government is closely monitoring Tuskys Supermarket, which is slowly sliding into financial trouble after failing to pay suppliers.

Trade Cabinet Secretary Betty Maina, told The EastAfrican that the retailer, which is operated by Tusker Mattresses Ltd is now on the ministry’s watch list for failing to meet its contractual obligations with suppliers.

“The ministry has received the report and has been engaging with both the retailer and the suppliers and monitoring the situation closely,” said Ms Maina. “This matter was brought to our attention in April. It is something which we are monitoring and engaging closely with Tuskys. Nobody wants to see businesses go under. The measures which have been put in place by both parties are being monitored by the ministry and reviewed on a weekly basis,” she added.

The government said early intervention in the retailer’s precarious situation will avert the collapse of the supermarket, which employs almost 6,000 workers and operates over 63 branches in Kenya and Uganda. “We have intervened early enough but it requires the participation and co-operation of both parties,” said Ms Maina.

In 2018, the once giant retailer in the region, Nakumatt, collapsed and entered into a voluntary administration to protect itself from creditors it owed over $300 million.

And in January this year, creditors voted to liquidate the retailer, driving the final nail in the firm’s coffin. Another regional retailer, Uchumi Supermarkets, is in deathbed after failing to pay off creditors, among them suppliers, banks and workers.

The Kenya Association of Manufacturers (KAM) whose members form the bulk of Tuskys’ suppliers said the retailer is facing debt payment challenges and is flouting the joint Prompt Payment Code of Practice that provides for payment of Fast Moving Consumer Goods (FMCG) within 30 days from the date of the invoice while other goods should be 45 days. Although the agreement was signed by the Association of Kenya Suppliers, Retail Traders Association of Kenya and KAM, Tuskys wants to pay suppliers after five months, but manufactures claim this will erode their cash flow positions and destabilise their businesses.

“Tuskys proposal to manufacturers is for payments to be made over 150 days for goods supplied as early as December 2019,” said KAM.

It is, however, argued that the voluntary nature of this Code of Practice has led to dishonouring of commitments made by the retail sector which has impacted the cash flow of manufacturers and suppliers in the country.

“A sustainable-solution would be to ensure that there is mandatory provision to ensure timely payments of supplies and repercussions in an event that the provisions are not honoured. Such include interests on delayed payments and financial guarantees for goods taken on credit,” said KAM.

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RETAIL SECTOR

In April this year, Shoprite Holdings Ltd, Africa’s largest fast-moving consumer goods retailer took its aggressive expansion to Kenya but came to a sudden halt after the firm announced the closure of its Waterfront branch in Nairobi’s Karen suburb rendering more than 100 workers redundant.

The retailer had already opened four stores in Kenya with plans to open seven more in the country, six in Nairobi.

In the same month, Tuskys closed three branches in Nairobi, Kitale and Mombasa saying it was temporary and meant to help it serve customers better in spacious branches by adhering to the government’s directives of social distancing, and personal hygiene to contain the spread of Covid-19.