The Naivas Story: They kept the business by giving up the company
In August, two thousand and thirteen, the largest retailer on earth made an offer for a supermarket chain in Kenya. Walmart, working through its South African arm, Massmart, wanted fifty one per cent — control, not a stake — of a company called Naivas, which twenty three years earlier had been one shop in a country town on the road out of Nakuru.
Before the deal could close, a member of the founding family walked into a Nairobi court, filed under a certificate of urgency, and asked a judge to stop the sale, on the ground that it would cause irreparable loss.
The application did not have to win. It only had to take long enough. In October, Massmart withdrew.
The largest retailer on earth. One relative with a lawyer.
THE GIFT
On the twenty seventh of July, nineteen ninety, in a trading town called Rongai, on the road out of Nakuru, a shopkeeper named Joram Kamau was leaving. He was moving to Nairobi to open the first city branch of the chain he was building, which was called Tuskys. He had a shop in Rongai, trading under the name Gitwe General Stores, and he did not take it with him. He gave it to two of his nephews, David Kimani and Simon Gashwe, who had worked in it as his employees.
Their father, Peter Mukuha Kago, was Joram Kamau’s brother. He came in almost at once, and for the decade that followed he was the one running it.
Kamau and Peter Mukuha Kago came out of one extended family based in Nakuru county. Two of the three biggest supermarket chains this country has had came out of that one family, in that one county. Kamau’s own destination was Nairobi, and what he was going there to build was Tuskys. Tuskys had started in Rongai too, a few years earlier, in the same small town — so the shop that changed hands that morning and the chain its owner was leaving to build had come off the same street. Everything either of them knew had been learned behind a counter and passed on: brother to brother, and brother to nephew.
The capital the nephews started with, by David Kimani’s own account years later, was two hundred thousand shillings.
None of this was a founding in the ordinary sense. Nobody had an idea. Nobody raised money against one. What changed hands that July was a lease, some stock, a counter, and the training that comes from having stood behind it.
In nineteen ninety three they registered the business properly, as Rongai Self Service Stores Limited. A second shop opened in Elburgon, and their sister Linet Wairimu came into the operating team with it. A third opened in Naivasha town, and their sister Grace Wambui came in with that one. By nineteen ninety eight the Naivasha branch had become the head office, so they renamed the whole company after it. Naivasha Self Service Stores. The name followed the building, not the family.
Self service was in the name because it was the product. In small Kenyan towns at the start of the nineties, most shopping still happened across a counter, with the goods behind the shopkeeper and the customer pointing at what they wanted. Letting people walk in, pick things up themselves and carry them to a till was the whole innovation. At that size, in those towns, it was enough.
Then, in two thousand and one, they took a lease on Ronald Ngala Street, in central Nairobi. To pay for it they closed two of their own shops. One was Elburgon. The other was the original shop in Rongai — the one Joram Kamau had handed them eleven years earlier.
They had been given a shop, and they spent it.
THE WILL
In two thousand and six the company changed its name for the last time. Naivasha became Naivas, shorter and easier to say in Kiswahili. The shopfronts went purple. Three years later they went orange and green, and have stayed that way since.
On the sixth of May, twenty ten, Peter Mukuha Kago died. He was buried in Nakuru, leaving nine surviving children and a chain of about twenty shops.
He also left a written will. In it were ten thousand shares in Naivas — twenty per cent of the company, his own holding. He distributed them across four of his nine children. David Kimani took four per cent. Simon Gashwe, four. Grace Wambui, six. Linet Wairimu, six.
The other eighty per cent of the company was already held by those same four. David and Simon had twenty five per cent each. Linet and Grace had fifteen each. The founder’s twenty per cent was the only part of the register still his to move, and he moved it to the people who already held the rest.
The rest of the estate went the other way. The cash in his account at the bank in Naivasha was divided equally among all nine children, and so were the proceeds of shares he held in another company. His clothes went to the family. His ties, the will said, to the church.
His eldest son, Newton Kagira Mukuha, was not one of the four. He had been given something else, earlier and separately — a cluster of his father’s older stores, handed over while his father was alive. Peter Mukuha Kago had been a shopkeeper long before any of this existed, and that earlier business was the eldest son’s.
In twenty eleven, Newton Kagira Mukuha went to court. The matter became Civil Suit four seven five of twenty thirteen, in the Commercial and Tax Division of the High Court in Nairobi. What he asked for was twenty per cent of Naivas, a seat on its board, and damages. His case was that there had been no written will at all.
In twenty fourteen the High Court dismissed the claim. It held that the will was valid, and it dismissed him on what he had already been given and what had become of it. He had, the court held, run down the stores he inherited from his father.
None of it stopped the shops. Through the filing, the hearings and the judgment, Naivas kept opening at the pace it always had — roughly three a year, in a decade when the chains around it were opening ten and borrowing to do it. There was no outside shareholder to reassure, no bank covenant to breach, and nobody to report to. For twenty years, that had been the point.
Four of nine children. It reads like a slight, until you look at which four. David Kimani. Simon Gashwe. Grace Wambui. Linet Wairimu.
The four who were in the shop.
THE DEAL THAT DIDN’T
Massmart is Walmart’s South African subsidiary, and in twenty thirteen it was looking hard at Kenya. Walmart had bought control of Massmart two years earlier, and Africa was the reason. Naivas was twenty three years old and running about thirty stores. Massmart offered to buy fifty one per cent of it, and the figure reported at the time was around three billion shillings.
There were no audited accounts in public. Naivas had no listing, no outside shareholder, and no obligation to publish anything about itself, and it had published nothing. The offer was for a company whose numbers only the family had seen.
The family did not say no. They said so publicly at the time: they were willing to sell half the company and one share more. Twenty three years in, with thirty stores and not one shilling of outside capital in the business, that is a reasonable thing to want.
What they did not have was a way of agreeing to it that bound all of them.
One member of the family filed for an injunction, under a certificate of urgency, on the ground that the sale would cause irreparable loss. The public record does not definitively say who filed it, so neither will we.
An injunction of that kind is not a verdict. It is a pause. And a listed acquirer, answering to its own shareholders, does not sit through a private family working out which of them is entitled to sell — not with a continent of other markets open to it. In October, twenty thirteen, Massmart withdrew. It came to Kenya two years later under its own Game brand, on the Thika superhighway, and closed that store in twenty twenty three. Buying thirty stores is faster than building one; when the buying failed, it built.
This is the one time in the whole of this story that the family declined to hand something over. They kept the company. The thing they were holding on to went away.
So there is a version of Kenyan retail that did not happen, and it is genuinely not obvious which one was better. A Naivas inside Walmart from twenty thirteen would have gone through everything that came next as a subsidiary of a listed multinational, with that balance sheet behind it and its decisions made somewhere else. Nobody knows what that country’s supermarkets look like now. We are not going to pretend to.
WHAT THEY BOUGHT WHILE EVERYONE ELSE SOLD
Between twenty fifteen and twenty twenty, Kenyan formal retail came apart. Uchumi, the oldest chain in the country, closed its cross border stores and went through the second collapse of its life. Nakumatt, the largest, went into administration and then into liquidation. And Tuskys went down with them — the chain Joram Kamau left Rongai to build, on the morning he handed his nephews the shop.
Naivas never opened a store outside Kenya. Not one, in thirty six years. Uchumi and Nakumatt both crossed into Uganda and Tanzania, and both carried the losses from those subsidiaries home with them. Naivas had none to carry.
It stayed out of the hypermarket race as well. It grew at roughly three stores a year through the twenty tens, funded out of its own cash and a modest amount of bank debt, rather than out of the supplier credit that was financing the chains around it. By February of twenty twenty it was running about sixty.
Our reading — and it is a reading, not a finding, because nobody has run the other version — is that refusing to cross a border is the single largest reason this company is still trading.
It also priced itself in the middle and stayed there. Not the premium hypermarkets, not the deep discounters: the shop where the weekly food shop of a household on an ordinary Kenyan salary actually happens. About four fifths of what it sells is made in Kenya. Effectively all of the fresh produce is grown here, bought through channels the company runs with smallholder farmers directly. There are around fourteen hundred suppliers on its book.
Then, in January and February of twenty twenty, the liquidators put six of Nakumatt’s stores out to tender. Mega. Prestige. Lavington. Kisumu. Embakasi. Nakuru.
An independent valuer, Tysons Limited, put the six of them together at a hundred and ten and a half million shillings. Chandarana bid two hundred and forty six million. Tuskys bid seventy million, for three of them.
Naivas bid four hundred and twenty two million shillings.
Roughly five times the valuation. They were not buying property at that price, and they were not confused about what property costs. Our reading is that what four hundred and twenty two million shillings bought was the certainty that nobody else would be standing in those six buildings. The figures are on the record. The reading is ours.
The Competition Authority approved the transaction on the twenty eighth of February, twenty twenty, on one condition — that Naivas honour Nakumatt’s existing supplier contracts. So they took the suppliers as well.
Nakumatt had been financed, in large part, by the credit its own suppliers extended to it. What Naivas agreed to, as the price of the six buildings, was to go on buying from the people that credit had come from.
They took Uchumi’s anchor tenancy at Capital Centre on Mombasa Road, and the space Tuskys had held at Juja City Mall. In five years the sector had lost its three largest names, supplier credit had reset across the whole industry at once, and landlords had lost anchor tenants mall by mall. Naivas was the tenant who could still sign.
And in December of that year they took a lease on Aga Khan Walk, in central Nairobi. Uchumi had opened a branch in that building in nineteen seventy six.
THIRTY ONE, FORTY, FIFTY ONE
Between February and April of twenty twenty, four institutions bought into Naivas together. Amethis, a French investment firm, led it. DEG, which belongs to the German state development bank. MCB Equity Fund, out of Mauritius. And the International Finance Corporation, part of the World Bank group. Between them they took about thirty one and a half per cent of the company, for around six billion shillings.
None of them was a retailer. None of them wanted to run it. What they wanted was what institutions of that kind always want. Audited accounts to a standard. A board that meets and keeps minutes. Reporting on a calendar. And the ability to raise an objection in a room, rather than by quietly selling their shares. No Kenyan family retailer had taken that deal before.
It cost the family something specific. From that point on, four people who had grown up behind the same counter could not simply decide things among themselves.
The family had gathered its own shareholdings into a holding company incorporated in Mauritius like the buyers, called Gakiwawa Family Investments.
In August of twenty twenty two the whole of that block changed hands, and more with it. IBL Group, a conglomerate from Mauritius, came in alongside Proparco, which belongs to the French development agency, and DEG again. They bought through a jointly owned Mauritian vehicle called Mambo Retail, which ended up holding forty per cent of Naivas International, the company that owns Naivas in Kenya. The consideration was about a hundred and nineteen point six eight million dollars. Gakiwawa held the other sixty.
Each of these sales bought the same two things: capital the family could not generate out of its own tills, and governance it could not appoint out of its own household.
Then, on the twelfth of July, twenty twenty three, Mambo Retail bought eleven per cent more, from Gakiwawa Family Investments, for about forty one point seven million dollars.
That put Mambo Retail at fifty one per cent. For the first time in thirty three years, the founding family did not control the company.
The family, forty nine.
Control and economics are not the same number here, and one of them is ours rather than theirs. Mambo Retail holds fifty one per cent of Naivas International. IBL holds seventy three point two per cent of Mambo Retail. Multiply those and IBL’s own economic interest in the Kenyan business works out at about thirty seven point three per cent. Nobody publishes that figure. We calculated it from two figures that are published.
The Kenya Revenue Authority then took an interest in the first of those transactions. It assessed one point seven nine billion shillings in corporate income tax on the twenty twenty sale, and its argument is narrower than it sounds. The authority’s case is that the family had held the stake for trade rather than as a long term investment — so the gain is business profit, taxable like any other, and not a capital gain at all. The Tax Appeals Tribunal ruled in the authority’s favour, and a further appeal is expected. What is being decided is whether a Kenyan family business can hold its shares offshore and sell them without Kenya taxing the proceeds.
THE FIRST OUTSIDER
On the seventh of October, twenty twenty five, Naivas announced that David Kimani Mukuha was stepping down after thirty five years, and that the next chief executive would be Andreas von Paleske.
Von Paleske is German. He came to Naivas in twenty seventeen as chief strategy officer, recruited personally by Kimani, three years before any outside investor arrived. On the first of November twenty twenty five he became the first chief executive in the company’s history who was not family.
Kimani gave a reason, and it is his sentence and not ours. The handover was meant, he said, to shield the company from internal disputes that could destabilise operations.
Six months before that announcement, on the twenty first of March twenty twenty five, the Court of Appeal permitted Newton Kagira Mukuha to bring a fresh application challenging his father’s estate. His earlier appeal had been dismissed in full in December, twenty twenty one, by a court that called the repeated filings an abuse of process.
And then, in March of twenty twenty six, the High Court suspended the whole of the twenty thirteen suit — every proceeding in it — until the Court of Appeal finishes with two appeals he filed years ago in Nakuru. It is listed for mention at the end of June. The fight over the shares is not resolved. It is frozen, waiting on a different court.
The company he handed over is the largest in Kenya by every published measure: a hundred and fourteen stores this year, in thirty eight of the country’s forty seven counties. The nearest competitor by store count runs sixty. In the financial year to June, twenty twenty five, revenue grew twenty one point six per cent and net profit grew forty three point four per cent. Revenue was somewhere above a hundred and thirteen billion shillings — which figure you get depends on the conversion, because these accounts are filed in another currency by a Mauritian parent. The growth is what everyone agrees on.
The year before that, profit fell. The company named the reasons — reorganising, opening new stores, a weaker shilling, a country that spent part of that year in the streets, and competitors it had not faced before. It has since restated a target of two hundred stores by the end of the decade.
There is a second tax case and it is a different one. The revenue authority has assessed seven hundred and seventy seven million shillings against a staffing company owned by a family heir, which supplied labour to Naivas. It is not income tax — it is value added tax on salary disbursements, and an interim order bars collection while a second appeal runs at the Commercial Division of the High Court. Different taxpayer, different tax, different court, and no money moving.
In May, twenty twenty five, a committee of the Nairobi county assembly inspected the Moi Avenue branch and reported expired product on the shelves and food handlers without the statutory health tests. It ordered every Naivas outlet in the city closed, and Carrefour’s too. Naivas denied the findings and rejected the order — and the county’s own executive then declined to enforce it, its Director of Environmental Health finding the inspection short of the legal threshold for closing anything.
And the competition has changed shape. Discount chains have arrived, several of them Chinese owned, and one of the newest was founded by the man who ran Naivas’s commercial side for seven years.
About eleven thousand people work in these stores. The ownership of the company changed hands twice around them, and there is no account anywhere of what that was like. We are not going to invent one.
Fourteen years of litigation inside one family, and at the end of it the family hands the running of the company to somebody who is not in it, and says that is the reason. The fact is his. The reading is ours. The fracture did not weaken this company’s governance. It produced it.
Aga Khan Walk. Uchumi opened in that building in nineteen seventy six. It is a Naivas store now. So are six of Nakumatt’s, and part of what Tuskys held. The sector outlived every firm its founders built except this one, and this one kept letting go.
So whose company is it now? The family holds forty nine per cent and does not control it. The chief executive is not family. The case that produced him is suspended, not finished. This is Asili Africa. Every empire has an origin. See you on the next one.
Key Takeaways
- THE GIFT. On the twenty seventh of July, nineteen ninety, in a trading town called Rongai, on the road out of Nakuru, a shopkeeper named Joram Kamau was leaving.
- THE DEAL THAT DIDN’T. Massmart is Walmart’s South African subsidiary, and in twenty thirteen it was looking hard at Kenya.
- WHAT THEY BOUGHT WHILE EVERYONE ELSE SOLD. Between twenty fifteen and twenty twenty, Kenyan formal retail came apart.
- THE FIRST OUTSIDER. On the seventh of October, twenty twenty five, Naivas announced that David Kimani Mukuha was stepping down after thirty five years, and that the next chief executive would be Andreas von Paleske.
Also available on YouTube — search “Asili Africa” or subscribe to our channel.