The Uchumi Story: Kenya’s first supermarket, two collapses inside a decade, one brand still standing
On the second of June, two thousand and six, the Capital Markets Authority of Kenya suspended trading in the shares of a company called Uchumi Supermarkets. The suspension came the day after Uchumi’s own Board of Directors had resolved that the company should cease operations, and on the same day that two secured lenders, Kenya Commercial Bank and the PTA Bank, moved to place the company under receivership. Total exposure at that point was approximately two point two billion Kenyan shillings. Roughly eight hundred and ninety one million of that was owed to the two banks. Roughly one point eight billion was owed to the retailer’s suppliers.
At the time of that suspension, Uchumi was the oldest formal supermarket chain in Kenya. It had been founded in nineteen seventy five as a public limited company owned by three Kenyan parastatals, under a founding mandate to create retail outlets for Kenyan manufactures. It had listed on the Nairobi Stock Exchange in nineteen ninety two. It had opened the first Kenyan hypermarket format in the nineteen nineties. And it had crossed the Kenyan border in two thousand and two, opening its first store outside the country, in Kampala. When Wikipedia and the contemporary Kenyan trade press summarised what happened on the second of June, two thousand and six, they used almost identical language. This was, they said, one of the greatest corporate disasters in independent Kenya history.
Except that is not where the story ends. On the thirty first of May, twenty eleven, exactly five years to the day after suspension, Uchumi Supermarkets was relisted on the Nairobi Stock Exchange. A new chief executive, a Kenyan accountant named Jonathan Ciano, had been running the receivership from July of two thousand and six. Under his management, five reopened Nairobi stores had grown back into a forty store network across Kenya, Uganda and Tanzania. Turnover in the year to June of twenty fourteen would climb to approximately fourteen point five billion Kenyan shillings. The company would cross-list on three additional African stock exchanges. The Kenyan trade press would describe the Uchumi turnaround as one of the most remarkable listed company recoveries on the continent.
And then, on the fifteenth of June, twenty fifteen, the same Uchumi board dismissed Jonathan Ciano and his chief financial officer for gross misconduct and negligence. A forensic audit conducted by KPMG covering the two years to the thirty first of May, twenty fifteen, would be presented to the board and to creditors, and the findings would ground a Capital Markets Authority action in August of twenty sixteen imposing penalties of twenty one point seven million shillings and a five year ban from holding office in any Kenyan listed company. In the year to June of twenty fifteen, Uchumi posted a loss of approximately three point two billion Kenyan shillings. In October of that year, the retailer closed all its Uganda and Tanzania operations, laying off roughly nine hundred people across the two countries.
This is the story of the oldest supermarket chain in Kenya. A company that Kenyan industrial policy invented in nineteen seventy five, that Kenyan retail investors bought into on the Nairobi Stock Exchange in nineteen ninety two, that collapsed for the first time in June of two thousand and six, that came back from that collapse and looked, for a few years, like the great Kenyan corporate turnaround story of its decade, and that then collapsed a second time, in a different way, between twenty fifteen and twenty twenty. Fifty one years after its founding, Uchumi is still, technically, on the Nairobi Stock Exchange. It trades under a court ratified Company Voluntary Arrangement. It operates two stores. This is Uchumi.
THE ORIGIN
The origin of Uchumi does not begin in a family shop in a small Kenyan town. It begins in a government office in Nairobi. In nineteen seventy five, three Kenyan parastatals sat down together to incorporate a new public limited company under the Kenyan Companies Act. The three parastatals were the Industrial and Commercial Development Corporation, the Kenya Wine Agencies, and the Kenya National Trading Corporation. The founding mandate of the new company, in the words of the corporate charter, was to create outlets for the equitable distribution of commodities and to create retail outlets for Kenyan manufactures. The name they chose for it was Uchumi. In Kiswahili, that word means economy. The name was a direct statement of purpose. The new company was intended to be an engine of the Kenyan economy.
The three parastatals did not intend to learn the supermarket business from scratch. On the seventeenth of December, nineteen seventy six, they signed a management and training contract with the Italian supermarket group Standa. Standa was, at the time, one of Europe’s leading supermarket operators. Its role in the new Kenyan business was operational. Standa would run the day to day operations of the first Uchumi stores, and it would train the Kenyan personnel who would eventually take over the running of the whole organisation. The first three Uchumi branches opened in Nairobi in the same year that the Standa contract was signed. One of them was at the Aga Khan Walk site in the central business district. The building that stands on that site is called, to this day, Uchumi House. It also houses the head office of ICDC, the anchor parastatal shareholder. From the very beginning, the physical, corporate and civic identities of Uchumi and of the Kenyan state were fused into one address.
To understand why that mattered, understand the Kenyan retail environment Uchumi was walking into. In nineteen seventy five, Kenya’s grocery sector was almost entirely informal. Small counter shops called dukas. Open air markets. Itinerant traders. The formal, self service, aisle based supermarket format that a middle income European family would have taken for granted did not exist in Kenya at any meaningful scale. Uchumi was, from its first day of operation, the country’s first at scale formal retail operation. And it occupied that position substantively alone through the late nineteen seventies and into the early nineteen eighties. When Atul Shah relaunched his family’s Nakuru mattress shop as a supermarket format in nineteen eighty seven, he was doing so eleven years after Uchumi. When the Tuskys supermarket chain was founded in nineteen ninety, that was fifteen years after Uchumi. When Naivas was founded in nineteen ninety eight, that was twenty three years after Uchumi. In the founding order of the entire modern Kenyan supermarket sector, Uchumi is first.
Uchumi’s second decade was quieter than its first. Through the nineteen eighties the company grew steadily inside Kenya on the operating template Standa had trained the founding team to run. In nineteen ninety two, seventeen years after founding, Uchumi listed on the Nairobi Stock Exchange. It was one of the first Kenyan retailers to list at all. This is the moment at which the story becomes complicated. Because from nineteen ninety two onward, Uchumi was no longer simply a parastatal joint venture with tradeable shares. It was a publicly listed company with an anchor state shareholder and a diffuse pool of Kenyan retail investors on top. Both sets of shareholders had claims on the company’s direction. The tension between what a national industrial policy instrument was supposed to do, and what a return seeking public company was supposed to do, would define every corporate crisis Uchumi ever had.
In the nineteen nineties, Uchumi did something no other Kenyan retailer had done. It introduced the hypermarket format to the Kenyan market. A hypermarket combined a full line supermarket with a general merchandise offer inside a single very large store. The Ngong Road Hypermart opened in nineteen ninety seven, and it became, along with Aga Khan Walk, one of the two anchor stores of the whole Uchumi brand. In two thousand and two, Uchumi crossed the Kenyan border for the first time and opened a store at Garden City mall in Kampala, Uganda. That opening was, for the Kenyan trade press at the time, a marker of arrival. A Kenyan retailer, publicly listed, was exporting the country’s supermarket sector into a neighbouring market. The story that ends with Uchumi as a small distressed two store operation begins, in nineteen ninety seven, with the largest hypermarket in the country, and in two thousand and two, with a Kenyan flag flying above a Kampala storefront.
THE BUILD
On the thirteenth of December, two thousand and one, the Industrial and Commercial Development Corporation seconded a private sector executive named Christopher John Kirubi to chair the Uchumi board. Chris Kirubi was, at that time, one of Kenya’s most recognised business figures. He was a major ICDC shareholder in his own right. And by his own account, and by the account of the newspapers that would later write his retrospective, he inherited an Uchumi that looked, on paper, in reasonable shape. Turnover was in excess of one billion Kenyan shillings. Annual profit was more than one hundred and fifty million. Cash reserves were of a similar order. Uchumi was not obviously a company in crisis. Yet.
Under Kirubi’s chairmanship, Uchumi opened six new branches on an aggressive expansion drive. Gross profit rose from one point two two four billion shillings in two thousand and one to one point three seven three billion the following year. That is a real increase. But the operating cost of running six new branches wiped it out. Operating profit fell from one hundred and eighteen point five million shillings in two thousand and one to eighty three point two million in two thousand and two. This is the specific mechanical failure at the root of the first Uchumi collapse. The company was opening more stores than it could afford to run. And it was booking gross profit growth while operating profit was going backwards. The Kenyan trade press, at the time, did not fully see the divergence. By two thousand and four, Uchumi was reporting a net loss of approximately six hundred and ninety nine million Kenyan shillings.
The board’s response to the two thousand and four losses became the single most cited pre collapse governance failure at Uchumi. In that year, the Uchumi board approved the sale of the landmark Aga Khan Walk branch to a company called Allgate Limited. The sale price was one hundred and forty seven million Kenyan shillings. Uchumi then leased the same premises back at one point seven million shillings a month. And an independent valuation, cited in a subsequent Kenyan court case, put the property closer to five hundred million shillings. Five years later, in two thousand and nine, Chris Kirubi, the then managing director Kennedy Thairu, and twelve other named accused would be charged in a Kenyan court with conspiracy to defraud Uchumi over the Aga Khan Walk transaction. On the twenty fourth of May, twenty eleven, Chief Magistrate Gilbert Mutembei would acquit all fourteen accused, ruling that Uchumi was not a State parastatal in the sense required by the specific charging statute, and that the prosecution had not established conspiracy on the evidence. There is, on the public record, no criminal fraud conviction against any of the Aga Khan Walk defendants. But the transaction remains, in the Kenyan trade press, the most cited example of listed company governance failure of its decade.
Chris Kirubi resigned from the Uchumi board in June of two thousand and five. Losses continued to compound. By the first half of two thousand and six, Uchumi was unable to service its bank facilities and was falling behind on supplier payments. On the thirty first of May, two thousand and six, the Uchumi Board of Directors resolved that the company should cease operations. On the second of June, two thousand and six, the debenture holders, Kenya Commercial Bank and the PTA Bank, placed the company under receivership. The Capital Markets Authority simultaneously suspended the shares from trading on the Nairobi Stock Exchange. Total exposure at that point was approximately two point two billion Kenyan shillings. Roughly eight hundred and ninety one million to the two banks. Roughly one point eight billion to suppliers. For the diffuse pool of Kenyan retail shareholders who had bought into the nineteen ninety two listing, the value of their shareholding moved to zero inside a fortnight. Wikipedia and the contemporary Kenyan trade press summarised what had just happened in almost identical language. This was, they said, one of the greatest corporate disasters in independent Kenya history.
THE RESCUE
There was a rescue. On the fifteenth of July, two thousand and six, six weeks after the receivership, a framework rescue agreement was signed between the Government of Kenya, the debenture holders, and the supplier body. Under it, five Nairobi Uchumi outlets reopened the same day, under a court appointed Specialised Receiver Manager and an interim management team. The man who walked into the receiver manager role, and who would run Uchumi as chief executive for the next nine years, was a Kenyan accountant named Jonathan Ciano. His operating line, quoted by the Kenyan newspaper The Standard: for any receivership to be successful you must have a manager or someone in charge who understands the business.
Ciano’s early results were real. In two thousand and eight, Uchumi posted a profit of one hundred and six million Kenyan shillings against a prior year loss of two hundred and fifty seven million. Fifteen branches were operating. About one thousand people were on payroll. Eleven of the branches were in Nairobi. Three were upcountry. One was in Kampala. In March of twenty ten, Uchumi formally exited receivership. Kenya Commercial Bank and the PTA Bank converted the receivership debt they held into equity in the reopened company. It was, on any Kenyan corporate law reading, a genuinely rare achievement. A publicly listed company that had gone through a debenture holder receivership was now walking back into ordinary corporate operation, with its senior secured lenders converted into equity partners.
On the thirty first of May, twenty eleven, exactly five years to the day after suspension, Uchumi Supermarkets was relisted on the Nairobi Stock Exchange. Over the following three years, Ciano executed a second cross border expansion. Uchumi cross listed on the Rwanda Stock Exchange in October of twenty thirteen. On the Uganda Securities Exchange in November of the same year. On the Dar es Salaam Stock Exchange on the fifteenth of August, twenty fourteen. The Kenyan retail store network rebuilt itself. The Uganda operation grew. Tanzania opened. By fiscal year twenty fourteen, Uchumi was reporting net sales of one hundred and sixty five point four million United States dollars, or approximately fourteen point five billion Kenyan shillings, after tax income of about three hundred and eighty four million Kenyan shillings, and a network of approximately forty stores across three East African countries. In April of twenty fourteen, Uchumi raised approximately eight hundred and ninety six million shillings from a rights issue on the Nairobi Stock Exchange. A Capital Markets Authority investigation, still to come, would find that the information memorandum for that rights issue was, and I quote the regulator, not updated with the material developments at Uchumi necessary to give investors the full picture of the impact of the funds raised through the rights issue. The Kenyan retail shareholders who subscribed for those rights would, inside eighteen months, lose effectively their entire subscription.
THE SECOND COLLAPSE
The turn began quietly. In June of twenty fourteen, Uchumi issued a profit warning, citing losses at its Uganda and Tanzania subsidiaries. Same store sales growth in Kenya was flattening. Nakumatt, at the top end, was under its own debt driven pressure and had lost its Westgate flagship the previous September. Naivas, at the middle, was modernising fast. Carrefour, backed by the Emirati retail conglomerate Majid Al Futtaim, had just entered the Nairobi market at the upper end. And then, on the fifteenth of June, twenty fifteen, the Uchumi board, chaired by Khadija Mire, held a press conference. Chief executive Jonathan Ciano and chief financial officer Chadwick Okumu had been dismissed for gross misconduct and negligence. Human resources manager Michael Kibe had been suspended. A general manager for operations named Owino Ayodo would take over as acting chief executive. A forensic audit had been commissioned. The auditor was KPMG. The scope was the two years to the thirty first of May, twenty fifteen.
The findings of the KPMG factual findings report, as summarised in the Kenyan press coverage of the creditor facing document, were four. The report alleged that Ciano’s wife had become one of Uchumi’s largest fresh produce suppliers without disclosure of the conflict of interest. That she had over invoiced the retailer. That forty six percent of procurement staff at Uchumi did not meet the minimum qualifications set in the retailer’s own HR manual. And that the accounts for the financial years twenty ten through twenty fourteen, prepared by the then external auditor, Ernst and Young, contained misleading information. Jonathan Ciano’s own position was, and remains, that he had resigned two days earlier, on the thirteenth of June, and that the subsequent board dismissal was null and void. A Kenyan court would later agree with him on the pure employment law question and award him six point five million shillings in gratuity and unused leave days. The Capital Markets Authority would go further. In August of twenty sixteen, the CMA imposed penalties totalling twenty one point seven million shillings on Ciano, Mire, Okumu, and former directors James Murigu and Bartholomew Ragalo, and banned all five from holding office in any Kenyan listed company for five years. Ciano was personally fined five million shillings and required to return thirteen point five million shillings as proceeds of the undisclosed conflict of interest. A subsequent High Court decision by Justice George Odunga dismissed the CMA fraud charges on faulty disciplinary process grounds. The Court of Appeal subsequently reversed that dismissal. The final substantive resolution is not on the public record.
In August of twenty fifteen the board hired a new permanent chief executive. Doctor Julius Kipng’etich had until that point been the Kenyan private sector’s canonical parastatal turnaround executive, having run the Kenya Wildlife Service from December of two thousand and four to September of twenty twelve, and Equity Group Holdings as chief operating officer from October of twenty twelve to September of twenty fifteen. The framing was direct. Kipng’etich was there to save Uchumi. He would have twenty seven months to do it.
In October of twenty fifteen, Uchumi closed its Uganda and Tanzania operations. Approximately nine hundred people were laid off across the two countries. About four hundred of them in Uganda alone. Uganda and Tanzania had represented approximately four point seven five percent of Uchumi’s stores. They had represented approximately twenty five percent of its operating cost. Ugandan workers and suppliers were left substantively unpaid. The Tanzanian government subsequently demanded that the Kenyan Government take responsibility for a two point three billion Kenyan shilling supplier claim. Both of those cross border cleanup obligations remain live overhangs on the Uchumi balance sheet a decade later. In the year to the thirtieth of June, twenty fifteen, Uchumi posted a loss after tax of approximately three point two billion Kenyan shillings. That was a three point six billion shilling swing from the record year that had preceded it.
The Kenyan state, which had been an anchor shareholder for four decades, intervened. In December of twenty fifteen the Cabinet approved a one point eight billion shilling bailout for Uchumi, to be released in tranches. Five hundred million shillings was disbursed in January of twenty sixteen. A further seven hundred million was released later in the same year. But the remaining tranche was withheld after Uchumi failed to meet the stated conditions. This is a specific and important point about the character of the Uchumi rescue. The state did not extend an unconditional bailout to the retailer it had helped invent. It front loaded two thirds of the promised amount and walked away from the third tranche. Meanwhile, Kipng’etich had been running a parallel strategic investor process. The New York based private equity firm Kuramo Capital had committed to a three point five billion shilling equity injection, worth about thirty five million United States dollars. At the last minute, Kuramo pulled out. A follow on conversation with an unnamed Asian investor did not close. The specific reason for the Kuramo exit has never been placed on the public record.
Kipng’etich resigned on the thirtieth of November, twenty seventeen, after approximately twenty seven months in the role. Chief financial officer Mohamed Ahmed Mohamed was appointed acting chief executive, and would run Uchumi for the next four years. Stores continued to close. The Ngong Hyper flagship, the store that had defined Uchumi’s hypermarket era, closed in this window. In December of twenty eighteen, Uchumi announced a two point five billion shilling sale of its largest disposable asset, a seventeen acre parcel of land in Kasarani on the Thika Superhighway corridor, to a private company called Jewel Complex Limited, linked to a religious group known as Jesus Winners Ministry and to its leader Edward Mwai Kiongo. The Kenya Defence Force, however, asserted a claim over seventeen of the twenty acres of that land, and placed a caveat on it. The Kasarani sale did not close. The retailer’s largest source of potential cash generation was, from that point onward, tied up in a live litigation with the Kenyan military.
THE AFTERMATH
On the second of March, twenty twenty, creditors representing more than seventy percent of Uchumi’s debt approved a Company Voluntary Arrangement under the Kenyan Insolvency Act of twenty fifteen. Under the terms, banks would write off approximately fifty percent of their arrears. Suppliers would accept a haircut of approximately thirty percent. The effective creditor recovery, as summarised at the time, was around thirty cents on the shilling. On the first of July, twenty twenty, the High Court of Kenya ratified the arrangement. It was the first significant Kenyan public market retail CVA under the twenty fifteen Insolvency Act, and it remains a leading Kenyan legal precedent for the restructuring of an insolvent publicly listed retailer.
The twenty twenty arrangement did not work. The reason was mechanical. The Kasarani land was still tied up in the Kenya Defence Force caveat dispute, and without the sale of the Kasarani land, the CVA had no source of funds to pay creditor arrears. On the thirty first of August, twenty twenty three, a fourth creditors meeting unanimously approved a Revised Company Voluntary Arrangement. Its principal terms were three. First, the eventual sale of the seventeen acre Kasarani property to raise approximately two billion Kenyan shillings. Second, the conversion of fifty percent of creditor debt into Convertible Preferential Shares in Uchumi. Third, the restructuring of Government and Kenya Development Corporation debts into long term non interest earning loans. The dilution effect on the existing shareholders of Uchumi, if the supplier debt to equity conversion completes, is projected to be approximately sixty percent.
The year twenty twenty five brought an unexpected turn. Uchumi posted its first operating profit since twenty fourteen. On revenue of approximately one hundred and twenty three million Kenyan shillings for the year to the thirtieth of June, twenty twenty five, the company reported operating profit of approximately eight point eight million shillings. The share price rallied. By November of twenty twenty five it was up approximately three hundred and sixty five percent year to date. By early December the year to date figure was six hundred and seventeen percent. By the fifth of December, one Kenyan market monitor put it at eight hundred and forty one percent year to date. The Capital Markets Authority responded by opening a fresh governance review of the counter. The Uchumi share, having traded as a distressed asset for almost a decade, was suddenly the best performing counter on the Nairobi Stock Exchange for the year.
The market structural end state of the Uchumi story is that the physical footprint has moved sideways into the surviving Kenyan chains. Naivas has taken the middle market. Carrefour has taken the upper end and the hypermarket anchor slots. Quickmart has taken the value end. Uchumi itself, in twenty twenty six, operates two full time stores in Nairobi county. One is the Lang’ata Hyper on Carnivore Way, opposite Uhuru Gardens. The other is the Unicity branch at Unicity Mall. A third store, at Kitengela on the Kajiado Road, is scheduled to open on the first of July, twenty twenty six. The peak network was approximately forty stores. Peak turnover was approximately fourteen point five billion Kenyan shillings. Current revenue is approximately one hundred and twenty three million. That is a top line compression of about ninety nine percent across the decade.
The building that stands on the Aga Khan Walk site is still called Uchumi House. It still houses the head office of the Industrial and Commercial Development Corporation, the parastatal that helped found Uchumi in nineteen seventy five. The first Uchumi branch that opened on that site in nineteen seventy six is now a Naivas. The state anchor shareholding in Uchumi remains. It will be substantially diluted by the Revised CVA supplier debt to equity conversion. The Kenyan state, which invented Uchumi as an instrument of post independence industrial policy, is still a shareholder, fifty one years later, in what is now a small footprint distressed retailer with two stores. This is where the story sits, in July of twenty twenty six.
There is a specific lesson buried in the Uchumi story that the Kenyan corporate governance conversation still, more than a decade after the second collapse, has not fully absorbed. The Nakumatt collapse of two thousand and eighteen through twenty twenty was a family private company that could not scale governance to match the size of its operations. That anti pattern is well understood. Uchumi is the mirror image case. It was a publicly listed company with an anchor state shareholder. It had audited accounts. It had a Capital Markets Authority listing envelope. It had every governance mechanism the family owned chains did not have. And it failed anyway. Twice. Inside a decade. What Uchumi shows is that listing and state anchoring, on their own, do not solve for the underlying problem. Sub optimal expansion strategy, weak internal controls, misaligned incentives between operating management and long term shareholders, are the same failure pattern in both models. The reason Naivas is currently the surviving Kenyan supermarket flagship is not that it is publicly listed or state anchored. It is not either of those things. The reason is that it has, so far, aligned its operating management, its shareholders, and its expansion strategy in a way that neither Nakumatt nor Uchumi ever quite managed to.
Fifty one years after three Kenyan parastatals sat down to invent a company called Uchumi, the company still exists. It trades under a court ratified rescue arrangement. It operates two stores. Its share price rallied eight hundred percent last year. Its founding building still bears the founding name. And the specific question of whether the current recovery is durable, or a bounce off a very low base, is the specific question every Kenyan supermarket operator standing today, from Naivas to Quickmart to Carrefour, is quietly watching. This is Uchumi.
This is Asili Africa. Every empire has an origin.
Key Takeaways
- THE ORIGIN. Uchumi was invented in nineteen seventy five by three Kenyan parastatals as an instrument of post independence industrial policy, operationally trained by the Italian supermarket group Standa, and listed on the Nairobi Stock Exchange in nineteen ninety two.
- THE BUILD. An aggressive early two thousands expansion under chairman Chris Kirubi grew store count but reversed operating profit. The two thousand and four Aga Khan Walk sale and leaseback, later the subject of a fourteen defendant fraud case that ended in acquittal, became the most cited pre collapse governance failure of the decade.
- THE RESCUE. Under Jonathan Ciano, receivership converted into equity, the retailer relisted in twenty eleven, and by twenty fourteen Uchumi was a forty store, three country, cross listed retailer with fourteen point five billion shillings of turnover.
- THE SECOND COLLAPSE. A KPMG forensic audit, the June twenty fifteen dismissal of Ciano, CMA penalties in August twenty sixteen, and the closure of Uganda and Tanzania cost the retailer approximately nine hundred jobs and left two billion shillings of unpaid regional supplier claims still open a decade later.
- THE AFTERMATH. Two Company Voluntary Arrangements later, Uchumi trades as a two store operation whose share price rallied eight hundred percent in twenty twenty five. Naivas, Carrefour and Quickmart absorbed the physical footprint. The state remains a shareholder in what it invented fifty one years ago.
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