Kenyan govt asks for debt analysis from Nakumatt and Uchumi supermarkets

The two companies are going tough times in Kenya and the neighboring where some suppliers have not been paid.


Kenyan govt asks for debt analysis from Nakumatt and Uchumi supermarkets

The two companies are going tough times in Kenya and the neighboring where some suppliers have not been paid.

11 September 2017 Monday 16:49
Kenyan govt asks for debt analysis from Nakumatt and Uchumi supermarkets

By Azania Post Reporter and Agencies

KENYAN government has asked the ailing Nakumatt and Uchumi supermarkets to provide detailed analysis of the debts by October this year.

The two companies are going tough times in the country and neighboring where some suppliers have not been paid.

But speaking in Dar es Salaam last week, the Principal Secretary in Kenya’s Department of Trade, Ministry of Industry, Trade and Cooperatives, Dr Chris Kiptoo, said his government wants to see Nakumatt and Uchumi supermarkets flourishing.

It was reported that retail Nakumatt in Uganda were shelved dry while supplier claimed that they have not been paid for service rendered.

“Our government has asked the two companies to provide us with a detailed analysis of the debts by October so that we can be able to see what we can do to help,” he said in Dar es Salaam.

Dr Kiptoo was speaking during an event where senior trade officials from Tanzania and Kenya discussed trade wars between the two countries that have seen them exchanging import bans on several commodities during the past few months.

This comes at a time when tax authorities in the neighbouring Uganda have commenced the auction of Nakumatt goods as it moves to recover millions of shillings owed by the struggling regional retail chain.

Uganda Revenue Authority last Tuesday started to auction perishable goods owned by Nakumatt at two of its Kampala outlets, Bugolobi and Kamwokya, as the taxman seeks to possibly recover its $71,000 dues.

On his part, the Permanent Secretary in the Ministry of Industry, Trade and Investment, Prof Adolf Mkenda, said it was important for Kenya to help in payment of the money to suppliers of Uchumi and Nakumatt.

 “As for Nakumatt, we have calculated and arrived at Sh1.6 billion as the amount that the supermarket must pay its suppliers so that things can get back to normal. It is just a small amount of money but since the suppliers are largely small scale producers, the debts mean a lot to them,” said Prof Mkenda.

Nakumatt is banking on cash injection from a new strategic investor to address frequent stock outs at its outlets.

The company in May announced plans to close its poorly performing branches in Kenya and Uganda as part of cost-cutting measures aimed at saving the retailer Ksh1.5 billion (about Sh30 billion) annually. Back in Tanzania, a survey conducted by The Citizen shows that the shelves of the Kenya-based supermarket chain are increasingly running dry.

At its Mlimani City outlet, the supermarket has virtually no products in its shelves to the extent that in places where one would expect to see cooking equipment, detergents, bathing soaps and body oils among others, one will now see only biscuits.

While normally one would find a section of the shelves containing multiple arrays of biscuits, they have now been spread in one row in a majority of the shelves replacing other products.

Most of the shelves lie empty except for those furnished with cloths, television sets, novels and home equipment among the few.

Uchumi Suppliers Task Force chairman Joseph Mlay  said that “Nakumatt is facing a similar challenge that engulfed Uchumi’s operations in the country…Nakumatt’s trend of payment to suppliers has not been good, with some being paid just a quarter or half of what they have supplied at any given time,” he said.

The debts, he said, have been piling up to an extent that some suppliers have not been paid for up to one year.This, he said, was why some suppliers find no reason of continuing with the business of supplying their products to the retail chain operator as they also have to grapple with payment of bank loans with which they produced the products being supplied to Nakumatt.

In November last year, Nakumatt Tanzania wrote to the Fair Competition Commission (FCC), requesting that it be granted a permission to sell 51 per cent of its stake to Ascent Investment Limited so as to collect funds to tweak its operations amid increasing debts regionally.

This came only two years after the Kenyan retailer acquired Shoprite shops in Tanzania in a deal that was valued at Sh76 billion. The story is the same in Kenya, where Nakumatt supermarkets are now severely grappling with product shortages.

Azania Post

Updated: 12.09.2017 10:17
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