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Kenya’s big two supermarkets in serious financial trouble

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Kenya’s biggest supermarket brands are facing financial troubles that look likely to negatively affect their operations.

Nakumatt and Uchumi supermarkets have found themselves in a tight corner, which has forced them to even delay staff salaries, raising anxiety about their financial fitness.

Uchumi Supermarkets is yet to pay its over 1300workers May salaries, and the union has already moved in to seek government intervention. Uchumi management, led by CEO Julius Kipngetich, said it had allowed staff to access a fraction of their pay through an interest-free advance.

Uchumi attributed the delay in payment of salaries to constrained cash-flows that have rendered it unable to meet some of its obligations. “We have not been making the normal cycle of sales and, as a consequence, we have not been able to meet some of our obligations such as salaries,” a spokesperson said in an interview.

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The same happened with April salaries, an indication of drying coffers. The Kenya Union of Commercial, Food and Allied Workers (Kucfaw) has written to the Labour secretary Phyllis Kandie asking for her assistance in resolving the stalemate.

On the other hand Nakumatt, Kenya’s largest retailer by market share, is facing similar financial troubles and has not paid 1,555 employees their May salaries even as it sent more than 100 on compulsory leave, citing low business volumes.

The supermarket has the highest number of outlets in East Africa. By Monday this week, it had not paid 1,555 employees May salaries and had sent more than 100 on compulsory leave, citing low business volumes.

The retailer, which has 5,700 employees in Kenya, attributed the situation to a delay in completing the restructuring of its business.

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Kucfaw, which has 1,200 Uchumi employees as its members, also claims in its letter that Uchumi has defaulted on remission of statutory deductions as well as payment of overtime wages.

Uchumi, however, said its payments to the National Hospital Insurance Fund (NHIF) are up to date, but was two months late on contributions to the National Social Security Fund (NSSF).

In a May 17 letter to Ms Kandie over the delay in April salaries, Kucfaw secretary general Boniface Kavuvi said his members would “withdraw their labour” if not paid their dues by May 24. The employees were paid on May 26 only for the problem to reemerge this month.

The Labour ministry has in its response to Kucfaw appointed a conciliator, Hellen Apiyo, to liaise with the union and Uchumi management for a lasting solution to the issue.


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BT Reporter
BT Reporterhttp://www.businesstoday.co.ke
editor [at] businesstoday.co.ke
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