Botswana supermarket chain Choppies Enterprises has finally succeeded in its year-long quest to enter Kenya’s retail space through the acquisition of Ukwala Supermarkets stores.
The retailer on Monday announced its takeover of eight Ukwala outlets across the country. Three of the outlets are in Nairobi, four in Kisumu and one in Bungoma. Choppies first announced its intention to enter Kenya in May last year.
The transaction was halted by a claim by the Kenya Revenue Authority (KRA), which was demanding Ksh946 million in taxes and interest from the supermarket. The taxman went to court and stopped the planned sale, which dragged the acquisition for months.
Early this year, however, KRA and Ukwala opted to settle the dispute out of court in a deal that would see Ukwala pay Ksh59.7 million to the taxman within 30 days, and apply for a waiver of Ksh42 million it had racked up in interest and penalties.
The dispute will be heard by the KRA’s tax appeals tribunal. Besides Kenya, Choppies operates seven distribution centres and 125 retail outlets, comprising 72 stores in Botswana, 35 in South Africa and 18 stores in Zimbabwe.
High-end foreign retailers have taken growing interest in Kenya including the French supermarket chain Carrefour, the Turkish fashion retailer LC Waikiki as well as South African Massmart, which opened shop at Garden City Mall.
Kenya’s retailers, which are already straddled with huge debts, are facing major threats from bullish international investors. Uchumi supermarkets, which is courting an international investor owes suppliers Ksh3.6 billion, with another Ksh2.5 billion debt held by banks with charged assets against a total asset base of Ksh6.1 billion.
Last year, South African credit rating agency GCR revealed that Nakumatt’s total debt had more than tripled in four years to Ksh15 billion from Ksh4.2 billion in 2011. Kenya’s top three retailers — Nakumatt, Tuskys and Naivas — owed manufacturers Ksh8 billion in unpaid dues as at September last year, with some payments dating back to early 2014, the suppliers said then in a protest letter.
Suppliers invited by Uchumi to restructure their debt said all supermarkets were not paying their dues.