Uchumi — Kenya’s First Supermarket, Two Collapses, One Brand Still Standing

The Uchumi Story: Crossing Borders to Scale *(carried from prior generation

By November, twenty twenty five, the share price of a small company on the Nairobi Securities Exchange had risen about three hundred and sixty-five per cent on the year.

The move was large enough that the Capital Markets Authority opened a governance review of the company.

Then the company reported its first operating profit since twenty fourteen. About eight point eight million shillings for the year to June, on revenue of about one hundred and twenty-three million.

Business Daily reported where that profit came from. It came from rent.

The company had eleven tenants.

One of them, China Square, was paying it five million shillings a month.

The company is Uchumi. Kenya’s first supermarket chain.

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THE MANDATE

In nineteen seventy five, three Kenyan parastatals incorporated a new public company. The Industrial and Commercial Development Corporation, known as ICDC. Kenya Wine Agencies. And the Kenya National Trading Corporation.

It was registered under the Companies Act as a public limited company. Its shareholders were arms of the state. The company itself was not.

That distinction would matter later, in a courtroom. For now it meant three state bodies, each holding its own shares, in a company built to trade.

There was no founder in the usual sense. There was a charter, and the charter said what the company was for. To create outlets for the equitable distribution of commodities, and to create retail outlets for Kenyan manufactures.

They called it Uchumi. In Kiswahili, the word means economy.

On the seventeenth of December, nineteen seventy six, the three shareholders signed a management and training contract with Standa, an Italian supermarket group, then one of Europe’s leading supermarket operators.

Standa would run the stores day to day. And it would train Kenyan staff to take the business over.

That contract is why Uchumi arrived with a format no Kenyan competitor had. Self service, formal, European trained. The first three branches opened in Nairobi that same year.

On Aga Khan Walk, in central Nairobi, stands a building called Uchumi House. It carries the company’s name, and it houses ICDC’s head office. The founding shareholder’s head office and the company’s name, under one roof.

The grocery trade Uchumi walked into was overwhelmingly informal. Counter shops, open markets, traders on foot. Uchumi was the first formal supermarket chain at scale in the country.

For its first years it had that trade substantially to itself. Nakumatt’s relaunch as a supermarket did not come until nineteen eighty seven.

After that, the record goes quiet. For its first quarter century, no source names Uchumi’s managing directors, gives its numbers, or says how the handover from the Italians went. That gap is real, and we are going to leave it as a gap.

In nineteen ninety two, seventeen years after its incorporation, Uchumi listed on the Nairobi Stock Exchange, one of the first Kenyan retailers to do so.

From that day, it had public shareholders alongside the state bodies that founded it. Whatever happened to the company next, it would happen to them as well.

In nineteen ninety seven, it opened the Ngong Road Hypermart. One very large store, with a full grocery offer and general merchandise under a single roof. By the company’s own history, Uchumi led the hypermarket format in Kenya.

In two thousand and two, it pushed into coastal Kenya.

And that same year, it opened its first store outside Kenya, at Garden City, in Kampala.

AGA KHAN WALK

On the thirteenth of December, two thousand and one, ICDC seconded Chris Kirubi to chair Uchumi’s board.

He was one of the best known figures in Kenyan private business, and a major shareholder in ICDC in his own right.

By his own account, he found a company with turnover above one billion shillings, annual profit above one hundred and fifty million, and cash of a similar order.

Under his chairmanship, Uchumi went for growth, and opened six new branches.

Gross profit rose, from about one point two two billion shillings to about one point three seven billion. Operating profit fell, from one hundred and eighteen point five million in two thousand and one to eighty three point two million the year after.

The new stores cost more to run than they brought in.

By two thousand and four, Uchumi was reporting a net loss of about six hundred and ninety nine million shillings.

That year, the board sold the Aga Khan Walk branch property to a company called Allgate, for one hundred and forty-seven million shillings. Aga Khan Walk and Ngong Road were the two anchor stores of the chain.

And it leased the property straight back, at one point seven million shillings a month.

From then on, Uchumi paid rent at its own address.

An independent valuation, cited later in court, put the property closer to five hundred million shillings.

In two thousand and nine, the sale became a criminal case. Chris Kirubi, the managing director Kennedy Thairu, four other directors, and the directors of Allgate, fourteen people in all, were charged with conspiracy to defraud.

On the twenty fourth of May, twenty eleven, Chief Magistrate Gilbert Mutembei acquitted all fourteen.

He held that the prosecution had not proved a conspiracy. And he held that Uchumi was not a State parastatal, in the sense the charge required.

Three parastatals had founded it. In the eyes of the court, it was a listed company all the same. No conviction over the Aga Khan Walk sale appears on the public record.

Kirubi had already left the board, in June, two thousand and five.

The losses did not stop. By early two thousand and six, Uchumi could not service its bank loans, and it was falling behind with its suppliers.

On the thirty first of May, two thousand and six, the board resolved that the company should cease operations.

Two days later, on the second of June, the debenture holders put Uchumi into receivership. They were its two secured lenders. Kenya Commercial Bank, known as KCB, and the Eastern and Southern African Trade and Development Bank, known as PTA Bank.

The same day, the Capital Markets Authority suspended its shares. Thirty years after its first three branches opened, and fourteen years after it listed, the shares of Kenya’s first supermarket chain could not be traded.

Total exposure was about two point two billion shillings. The banks were owed around eight hundred and ninety one million. The suppliers were owed around one point eight billion, and the reported figures overlap.

A company chartered to put Kenyan goods in front of Kenyan shoppers was in the hands of its banks.

FIVE STORES

On the fifteenth of July, two thousand and six, five Uchumi stores in Nairobi opened their doors again.

In the six weeks since the receivership, three parties had agreed a rescue framework. The Government of Kenya. The two banks. And the body representing the suppliers, who were owed the most.

Under that framework, the five stores reopened under a Specialised Receiver Manager, with an interim management team.

The man running them was Jonathan Ciano, an accountant, with a background at large East African firms.

He put his method plainly to The Standard. For any receivership to be successful, he said, you must have a manager, or someone in charge, who understands the business.

The rescue began with shops. Five of them, open, stocked, and run by someone whose job was the business of running them.

It was a small start for a company that had been a national chain. Five stores, in one city, operating under a receiver, and with suppliers still owed money from before the collapse.

In two thousand and eight, still in receivership, Uchumi made a profit of one hundred and six million shillings. The year before, it had lost two hundred and fifty seven million.

Its shares were still suspended. Whatever was being rebuilt in the stores had no price on any exchange.

By then it was running fifteen branches, three times the number that had reopened two years earlier. Eleven in Nairobi, three upcountry, and one in Kampala.

About a thousand people worked for it.

In March, twenty ten, the creditors lifted the receivership. KCB and PTA Bank converted what they were owed into shares.

The two banks that had put Uchumi into receivership four years earlier were now among its owners.

Look back at the order it came in. The stores reopened first. Then the stores made money. Then the banks chose to own the company rather than be repaid by it.

The rescue had run through the shops.

On the thirty first of May, twenty eleven, Uchumi’s shares returned to the Nairobi exchange, five years to the day after its board had voted to stop.

THE FULL PICTURE

In October, twenty thirteen, Uchumi listed its shares in Kigali. In November, in Kampala. In August, twenty fourteen, in Dar es Salaam. Four exchanges in all.

In the year to June, twenty fourteen, net sales reached about fourteen point five billion shillings. Profit after tax was about three hundred and eighty four million. There were about forty stores, in Kenya, Uganda and Tanzania.

It had audited accounts, a regulator, a board, and shareholders on four exchanges. No other Kenyan retailer was listed on four exchanges. As much listed company apparatus as any Kenyan retailer has had.

In April, twenty fourteen, Uchumi had raised about eight hundred and ninety six million shillings from its shareholders, in a rights issue.

Two months later, in June, it issued a profit warning, blaming its subsidiaries in Uganda and Tanzania.

On the fifteenth of June, twenty fifteen, the board, chaired by Khadija Mire, dismissed Jonathan Ciano and the finance chief, Chadwick Okumu, for what it called gross misconduct and negligence.

It suspended the human resources manager, Michael Kibe, and named the head of operations, Owino Ayodo, acting chief executive.

Ciano’s position was that he had already resigned, on the thirteenth of June, two days earlier.

Years later, a court agreed with him on the employment question, and awarded him six point five million shillings in gratuity and unused leave.

The board commissioned an audit from KPMG, covering the two years to May, twenty fifteen. The report itself is not public. What is known of it comes from press summaries.

According to those summaries, the audit alleged that Ciano’s wife had become one of Uchumi’s largest fresh produce suppliers, that the conflict was not disclosed, and that she had over invoiced the retailer.

It alleged that forty six per cent of procurement staff did not meet the company’s own minimum qualifications.

And it alleged that the accounts for twenty ten to twenty fourteen, audited by Ernst & Young, contained misleading information.

The Capital Markets Authority said it would look at the audit firm. No outcome of that has been found, and no response from the auditor.

In August, twenty sixteen, the Authority acted. Ciano, Mire, Okumu and two former directors were penalised a total of twenty one point seven million shillings, and barred from holding office in any listed company for five years.

Ciano’s own share was a fine of five million shillings, and an order to return thirteen and a half million.

The regulator found that the rights issue memorandum had not been updated with the material developments needed to give investors the full picture.

The High Court dismissed the case against Ciano. The Court of Appeal reversed that decision. No criminal conviction appears on the public record.

So a KPMG audit, known to the public only through press summaries, alleged conflicts of interest, procurement failures and misleading accounts. The regulator acted on its findings. The courts have gone back and forth on the penalties. The record does not resolve him, and neither will we.

What the record does show is Uchumi’s own. A company on four exchanges, with audited accounts and a published prospectus, was found by its own regulator not to have given investors the full picture.

In October, twenty fifteen, Uchumi shut every store it had in Uganda and Tanzania. About nine hundred people lost their jobs, around four hundred of them in Uganda.

Those two countries held about four point seven five per cent of the stores, and about a quarter of the operating costs.

Uganda later told the East African Community that eight hundred workers and suppliers had not been paid. Whether they ever were is not on the record.

Much of what it had built in those two countries was written down in its accounts.

For the year to June, twenty fifteen, driven in large part by those write downs, Uchumi reported a loss of about three point two billion shillings.

KASARANI

In December, twenty fifteen, the Cabinet approved a bailout of one point eight billion shillings, to be paid in tranches. Not all of it was paid.

By early twenty sixteen, Uchumi’s debts to its suppliers were reported at about three point six billion shillings, double the figure of a year before.

That year it was given six months to settle about four point seven billion shillings owed to more than a hundred suppliers.

A New York private equity firm, Kuramo Capital, negotiated a three point five billion shilling equity injection. At the last minute, it pulled out.

An unnamed Asian investor followed. That deal did not close either.

No account of why Kuramo left has been published.

Julius Kipng’etich had been hired as chief executive in August, twenty fifteen, to turn the company round. He resigned in November, twenty seventeen.

His finance chief, Mohamed Ahmed Mohamed, took over, first as acting chief executive, then in the role itself, until his term lapsed in early twenty twenty two.

The Ngong Road hypermarket closed.

Business Daily counted twenty four branches closed in three years.

In twenty eighteen, the Capital Markets Authority moved Uchumi onto a recovery watch list, with two to three years to recover or face delisting. It was not delisted. It stayed on the board.

What Uchumi still owned was land. About twenty acres at Kasarani, beside the Thika Superhighway in Nairobi.

In December, twenty eighteen, it agreed to sell that land to a private buyer for about two point five billion shillings.

The Kenya Defence Forces claimed seventeen of those acres and lodged a caveat against them. The sale did not complete.

Three state corporations had founded Uchumi.

The government had brokered its rescue in two thousand and six.

The Cabinet had approved its bailout in twenty fifteen.

And the claim standing between Uchumi and its largest sale belonged to the Kenya Defence Forces.

On the second of March, twenty twenty, creditors approved a Company Voluntary Arrangement, with about seventy four per cent in favour. It covered about three and a half billion shillings of arrears, and about a hundred and twenty one suppliers sat on the creditors’ committee.

An arrangement of this kind lets a company that cannot pay its debts agree new terms with its creditors, instead of being wound up.

The banks would write off about half of their arrears. The suppliers would take a haircut of about thirty per cent.

The High Court ratified the arrangement on the first of July, twenty twenty. It was to settle the company’s preferential and unsecured debts over six years.

The money to pay the creditors was to come from Kasarani. Kasarani could not be sold. The arrangement could not pay.

On the thirty first of August, twenty twenty three, the creditors met again and approved a Revised arrangement. Every one of them voted for it.

Its terms were three. Sell the seventeen acre Kasarani property, for about two billion shillings.

Convert half of what the creditors are owed into Convertible Preferential Shares.

And turn the government debts into long term loans that carry no interest.

At its peak, about two and a half thousand vendors supplied Uchumi. Under the twenty twenty three terms, the suppliers it owes become its shareholders.

The company was chartered to give Kenyan manufacturers an outlet. Whether the suppliers it owes are those manufacturers, and what a thirty per cent haircut meant to a small one, no source says.

In October, twenty twenty one, a Naivas supermarket opened in Uchumi House, on Aga Khan Walk. The building that carries Uchumi’s name.

THE TENANT

For the year to June, twenty twenty five, Uchumi reported revenue of about one hundred and twenty-three million shillings. At its peak, the same line had read about fourteen point five billion.

Less than a hundredth of what it had been. On a base that small, a few million shillings either way is the difference between a loss and a headline.

The company has not published how much of that revenue is rent, how much is retail, and how much comes from the institutional supply business it says it has moved into.

What Business Daily did report is how the rent divides. China Square’s payment is eighty-four point one per cent of Uchumi’s rent roll.

Business Daily also reported that Uchumi had been sued over leasing space at Lang’ata to China Square. The outcome of that case has not been found.

At the end of June, twenty twenty five, Uchumi’s balance sheet showed negative equity of seven point zero five billion shillings.

In June, twenty seventeen, the figure had been three point four one billion. In eight years it had more than doubled.

The company reporting its first profit in eleven years was, on its own accounts, technically insolvent.

After the rally, Business Daily reported the share falling thirty per cent, as speculation fever cooled.

Who bought during the rally is not documented.

The arrangement has a court-appointed monitor, Owen Koimburi Njenga. In twenty twenty six, he told Parliament’s Public Petitions Committee that he was not briefed on the financing of the new branches at Unicity and Kitengela.

His approval, he said, was not sought or obtained.

A creditor resolution in March, twenty twenty five, had required the board and the monitor to approve jointly before any surplus cash was spent.

Uchumi’s response is not in the coverage. It is a live argument about who controls the company’s cash, and we are not going to settle it.

Former Uchumi staff have petitioned Parliament over salary arrears and terminal dues. In June, twenty twenty six, MPs summoned the company’s managers.

The monitor reported six point eight three million shillings paid, out of eight million set aside for arrears.

The coverage counts claims and shillings. It does not count people. No source says who these workers were, how long they worked there, or how many of them there are.

And the shop is still open. Uchumi trades from Lang’ata, on Carnivore Way, from Unicity Mall, and, since the middle of twenty twenty six, from a third branch at Kitengela.

People still walk in, fill a basket, and pay at the till. People still buy their groceries at Uchumi.

The company called its first annual general meeting in eight years for the twenty ninth of April, twenty twenty six, to cover its accounts from twenty eighteen to twenty twenty five.

A listed company had gone eight years without one. The meeting was also to fill the chair, left empty after the chairman and two directors retired.

The twenty twenty arrangement was built to settle its debts over six years, a window that ran to June, twenty twenty six. The window never closed. In March, twenty twenty five, the creditors voted that the arrangement would last until Kasarani was sold and the money shared out.

And the Revised arrangement still depends on the sale of Kasarani. In May, twenty twenty five, the High Court ruled that the land belonged to the Ministry of Defence. Uchumi has appealed, and no ruling on the appeal has been reported.

In nineteen seventy five, three parastatals chartered a company to create retail outlets for Kenyan manufactures. A shop, in other words, where the things Kenya made could reach the people who would buy them.

Fifty years later, that company still keeps a few shops open.

Whether it is still, in the sense its charter meant, a supermarket company, the record has not yet decided. The next set of accounts, and a piece of land at Kasarani, will start to decide it. This is Asili Africa. Every empire has an origin. See you on the next one.

Key Takeaways

• THE MANDATE. In nineteen seventy five, three Kenyan parastatals incorporated a new public company.
• FIVE STORES. On the fifteenth of July, two thousand and six, five Uchumi stores in Nairobi opened their doors again.
• THE FULL PICTURE. In October, twenty thirteen, Uchumi listed its shares in Kigali.
• THE TENANT. For the year to June, twenty twenty five, Uchumi reported revenue of about one hundred and twenty-three million shillings.

In this series: The Retail Collapse

Who took the shelf space when the chains fell?

1. Uchumi (this episode)
2. Nakumatt
3. Tuskys
4. Naivas
5. Quickmart
6. Chandarana Foodplus

Also available on YouTube — search “Asili Africa” or subscribe to our channel.