In Summary
  • Since the government is the single-largest shareholder in the company, taxpayers’ money is at risk if it collapses.
  • Of the Sh1.8 billion that the government promised to give in shareholder loans, only Sh500 million has been disbursed.

At the weekend, I visited the Uchumi Supermarkets branch at Capital Centre, on Mombasa Road.

It was a depressing experience, to say the least. The shelves were empty.

I then drove all the way to Ngong Road to witness the state of affairs at the chain’s largest branch. The spectacle was even more depressing.

FINANCIAL PROBLEM
Clearly, a national brand — what used to be a selling outlet for more than 80 percent of locally manufactured goods — is on its deathbed.

Since the government is the single-largest shareholder in the company, taxpayers’ money is at risk if it collapses.

Indeed, Uchumi’s impending implosion is bound to inflict widespread financial distress.

Mark you, Nakumatt Supermarkets, an even bigger selling outlet for manufacturers, is also deep in financial doldrums.

SOLUTION
But is anybody making a serious effort to address Uchumi’s woes?

Is the retailer likely to be revived anytime soon? I don’t think so.

When you closely follow what has been going on, the distinct impression you get is that neither the government nor the Uchumi management and board —and not even the strategic investor touted as having committed to pump Sh3.5 billion into the retail chain — is treating the matter with any sense of urgency.

BAIL OUT
Of the Sh1.8 billion that the government promised to give in shareholder loans, only Sh500 million has been disbursed.

The balance, which was to be disbursed to the company several months ago, is yet to come through.

The strategic investor — an entity by the name Kuramo Capital Management — were to conclude negotiations by signing a document known in commerce jargon as a ‘term sheet’ with the board several months ago. They haven’t.

From what I gather, the National Treasury now says the money will not be disbursed until the term sheet is signed.

RESTRUCTURE
It is a very confusing situation indeed, because the Uchumi board has reported that the strategic investor insists they will only put pen to paper upon securing written assurances from the government that the shareholder loan will be disbursed in full.

At one time, the understanding was that the loan would only be disbursed subject to production — by the Uchumi management and board — of a restructuring and turnaround plan acceptable to the Treasury.

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