Uchumi fate hangs in the balance as Cabinet demands accountability

July 31, 2016
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The bail out comes at a time when the retailer is engaged in what is perhaps its fiercest fight for survival after a High Court ruling that paved way for its liquidation/FILE
The bail out comes at a time when the retailer is engaged in what is perhaps its fiercest fight for survival after a High Court ruling that paved way for its liquidation/FILE

, NAIROBI, Kenya, Jul 31 – President Uhuru Kenyatta’s Spokesman Manoah Esipisu says Cabinet is yet to take a decision on the proposed Sh1.2 billion bailout plan for Uchumi.

Esipisu says it first requires several pertinent questions answered including the soundness of the turnaround plans and who should be held accountable for the retailer’s poor performance.

He says the terms of such a bailout would also need to be clearly spelt out.

“Cabinet is close to a decision. Cabinet asked the Ministry of Industrialisation, Investment and Trade to provide further details, at its next sitting, on four specific issues including: that the terms of the cash injection be spelt out in clear terms. If it is a loan, the rates need to be set out. If the government cash injection will be turned into equity, terms would need to be spelt out as well,” Esipisu said during his weekly media briefing.

“The soundness of Uchumi’s turnaround plan needs to be tested to answer the question, what is different now, and finally, the government wants an audit of management to satisfy themselves that Uchumi is led by a sound and competent team.”

“No one wants to see the crooks that brought Uchumi into problems not taking responsibility for it. There has to be accountability,” the State House Spokesman said.

The bail out comes at a time when the retailer is engaged in what is perhaps its fiercest fight for survival after a High Court ruling that paved way for its liquidation.

Uchumi Supermarkets closed five of its outlets — Taj Mall, Embu, Eldoret Sugarland, Nakuru and Kisii — in May as the company continues to ditch its non-profit making ventures.

Uchumi Supermarkets CEO Julius Kipng’etich explained the move would help reduce operational costs enabling it to concentrate on a leaner structure.

In October 2015, Uchumi announced plans to sell two of its branches in Nairobi; namely Lang’ata and Ngong Hyper. The company had also pulled out of the Uganda and Tanzania markets to concentrate on Kenya.

These are part of an elaborate revival plan by Kipng’etich who took the helm of the loss reporting supermarket from Jonathan Ciano in August of 2015.

Ciano was allegedly fired due to gross misconduct and negligence. However, Ciano claimed that he had resigned after not getting enough support from the board. Ciano had been CEO of Uchumi Supermarkets since 2006.

Kipng’etich, who turned around the Kenya Wildlife Service from a loss-making government institution, has once again been given the herculean task of injecting a new lease of life into Uchumi Supermarkets.

He is expected to introduce a new model of buying and selling of goods by the supermarket which has over 30 branches and about 5,000 staff on its payroll.

The new model is expected to be anchored in technology. This was one of the recommendations made by ABC Bank in an audit report.

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