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File Photo of an Uchumi Supermarket outlet. The write off follows the lenders acceptance of the retailer’s company voluntary agreement (CVA) which seeks to restructure the company’s debt into the medium term in a means to relieve pressure off Uchumi’s hard pressing repayment obligations.

KCB which is Uchumi’s largest creditor is expected to receive a final and full payment of the outstanding sum of Ksh.900 million on a quarterly basis to June 2024.

Meanwhile, Cooperative bank has offered a 40 percent waiver of its total outstanding loan facility including both principal and accrued interest to represent a Ksh.109.1 million write off.

KCB and Cooperative bank have agreed in principle to write off a combined Ksh.655.5 million in outstanding credit to the debt-strapped Uchumi Supermarkets.

The write off follows the lenders acceptance of the retailer’s company voluntary agreement (CVA) which seeks to restructure the company’s debt into the medium term in a means to relieve pressure off Uchumi’s hard pressing repayment obligations.

On its part, KCB which was first to take up the CVA has agreed to a waiver off all accrued interests and penalties an equivalent Ksh.365.6 million while offering a 44 percent discount on its lease facility to represent a write off of a further Ksh.180.9 million.

KCB which is Uchumi’s largest creditor is expected to receive a final and full payment of the outstanding sum of Ksh.900 million on a quarterly basis to June 2024.

Meanwhile, Cooperative bank has offered a 40 percent waiver of its total outstanding loan facility including both principal and accrued interest to represent a Ksh.109.1 million write off.

The bank however expects an immediate settlement of 10 percent of the outstanding Ksh.163.6 million after write-off, on or before the 28 of February 2020 as per a sworn affidavit filed in High Court’s commercial and tax division and seen by Citizen Digital .

Uchumi which was granted a further 30-days to engage its remaining secured creditors on November 7 including the United Bank of Africa (UBA) and the government has reached a further settlement deal with the Industrial and Commercial Development Corporation (ICDC).

According to court filings, the corporation has agreed to restructure repayments for its outstanding Ksh.112.8 million loan across seven years while opting in on a standstill agreement for the settlement of the principal Ksh.84.8 million.Further, the ICDC has tasked Uchumi with the provisioning of regular reviews to its cash-flow projection based on the retailer’s ongoing performance.Nevertheless, the […]

Uchumi Supermarket (Photo | Courtesy) SUMMARY

Through social media, a number did not seem to understand how the banks could let go of such a big amount of money

The banks’ gesture to help rescue the former chain store giant did not seem to be taken kindly by their customers who claimed to have small loans with the bank.

Immediately after news broke out that the Kenya Commercial Bank (KCB) and Cooperative bank agreed in principle to write off a combined debt of Sh655.5 million, Kenyans were quick to react.

Through social media, a number did not seem to understand how the banks could let go of such a big amount of money.

The banks’ gesture to help rescue the former chain store giant did not seem to be taken kindly by their customers who claimed to have small loans with the bank. Most argued that they did not see the need to be listed with the Credit Reference Bureau by the institutions over small loans.

Some of the comments include;

Peterson Gichaba – Not bad. As long as they cannot write off our small loans of few shillings that have put us on CRB.

Elijah Ongeri Michieka – KCB MPESA Sh1000 loan you can’t write off. What you so fast in doing is to write me in CRB.

Lerroy Jillo – Why don’t you write off ordinary mwananchi M-pesa loan?

Some jokingly asked mobile lending companies to embrace the ‘forgiving’ trend set by the banks and also write off their debts.Others called upon the Higher Education Loans Board (HELB) to follow suit in writing off student loan debts.“Can HELB kindly follow suit and learn from these two companies” Posted Steezy Shephard. Do you have stories, videos or pictures you would like to share with the world? Simply click on Post Your Story button placed at the top of the website

Tuskys Supermarket outlet on Kenyatta Avenue in Nairobi in July 18. PHOTO | EVANS HABIL | NMG Tuskys Supermarket is seeking to cement its dominance in the retail sector by franchising its brand to Small and Medium-sized Enterprises (SMEs) in all 47 counties as part of an aggressive growth plan.

Tuskys chief executive Dan Githua said the aim of the franchising strategy is to promote SMEs since they are the key engine to the country’s economic growth.

Speaking while launching Tuskys’ 60th outlet at Nanyuki Mall yesterday, Mr Githua said the firm’s national office in Nairobi was ready to assist applicants who wish to be enjoined in the programme dubbed ‘Tuskys Commercial Trade’.

"Anyone with space for business at any part of this great nation, we are readily available to brand their premises and avail our products to them at a fair price. This is one of our strategy to uplift SMEs," said Mr Githua.

In Laikipia County, the supermarket chain is aiming to roll out other outlets in Rumuruti and Nyahururu towns.

Tuskys first piloted a franchise branch in Nairobi as part of several growth strategies that also include merging with smaller retailers by 2024.

The plan includes partnering with local investors who will use the Tuskys brand name as well as setting up smaller stores in Kenya and Uganda.

“We will roll out a lot of stores, especially smaller format outlets on franchise model across East Africa and it is going to happen at the same time … We are allowing our partners to use the Tuskys brand, IT, human resource and supplier management systems among our other resources,” said Mr Githua in an earlier interview with the Business Daily.

“The small retailers are also improving and we see a lot of opportunity for consolidation and aggregation in the retail industry. Data available shows that we still have an opportunity to have three times more the number of supermarkets in Kenya.”

Tuskys is currently the biggest retailer in the country, a position it quickly rose to after Nakumatt and Uchumi began to collapse under the weight of debts.

Tuskys along Kenyatta Avenue in Nakuru Town. [Harun Wathari, Standard] With Sh800, a shopper at one of the foreign-owned retailers would still have some change after paying for a ten-pack tissue paper pack, a kilo of margarine and three litres of cooking oil. A similar shopping list but with a smaller (two-litre) cooking oil jar at an indigenous supermarket will cost Sh1,007, in a survey carried out last week. The saving is a whole Sh220 plus a litre of cooking oil – which separately retails at about Sh200. In the prior case, the global chain store which has been in operation for just four years has consistently managed to give shoppers the “best price guarantee”. Despite the locally-owned retailers having established long-running relationships with the suppliers including farmers, they cannot match newer entrants on pricing. Financial Standard set out to understand the competition among retailers in a sector that is undergoing major disruptions, especially after the death of former indigenous giants Nakumatt and Uchumi. Part of the reasons for the collapse was falling out with suppliers which led to empty shelves and disappointed shoppers who turned elsewhere. Findings of the study, mostly based on interviews with various stakeholders, reveal a fierce pricing war that has suppliers at the heart of it – but they are not complaining. In fact, big manufacturers such as edible oils manufacturer Bidco are happier dealing with foreign retailers despite the latter’s demands for deep discounts and promotional pricing. An official at the giant oils manufacturer confided in Financial Standard that their selling prices are “largely dependent on how soon the payment will be received”. Backed by deep pockets from back home, foreign retailers such as Walmart, Carrefour and Shoprite arrived in Kenya and hugely altered the supplier payment terms. With prompt payment, the retailers are able to push for friendlier pricing while negotiating with suppliers Tuskys, which has the biggest number of outlets, has taken note of the development and has gone out to search for additional working capital that should enable it to slash the payment period. Confidential sources have helped join the dots on why Tuskys, broadly viewed as the local retailing success after the fallen Nakumatt, would join the Nairobi Securities Exchange incubation platform known as Ibuka. “Tuskys is seeking to raise Sh1 billion from the market before the end of the year to boost its working capital to address the […]

[IMAGE/ COURTESY] Kenya Commercial Bank Group has recorded a Ksh19.2 billion net profit for the third quarter ending September 30, a growth of 6 per cent from Ksh18 billion in the same period in 2018.

According to KCB Group CEO and MD Joshua Oigara, the earnings were driven by cost management initiatives across all businesses.

“We had a strong quarter and the business witnessed growth across various segments. We made continued strong investments in our capabilities to serve customers better. The international businesses have continued to improve while our digital offerings are witnessing increased activity, giving the business impetus to continue growing,” said Mr Oigara.

“Going forward, we are emphasizing on driving more sustainable growth, excellent customer experience and diversification.”

The banks says despite a tough operating environment in the countries it operates in, the international business (excluding the Kenya subsidiary) posted improved performance. The combined after-tax profit increased 8 per cent to Ksh1.3 billion. Other than the Ugandan business, the rest of the four banking subsidiaries returned a profit.

According to KCB, the acquisition of the National Bank of Kenya (NBK) is expected to further cement the lender’s position in the domestic banking sector and strengthens its ability to access more business flows.

On November 1, NBK announced profits before tax of Ksh675 million for the period ended September 30, 2019, representing a 45 per cent growth from a similar period in 2018.

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KCB Group Chief Executive Officer Joshua Oigara NAIROBI, KENYA: Kenya Commercial Bank Group has recorded a modest growth of 6 per cent in its net profit for the period ending September 2019 In a statement, the lender said profit after tax surged 6 per cent to Sh19.2 billion from Sh18.0 billion realised the same period last year. The net earnings increased from Sh18 billion, a similar period last year, driven by cost management initiatives across all businesses, said KCB Group CEO and MD, Joshua Oigara, on Wednesday while releasing the results. “We had a strong quarter and the business witnessed growth across various segments. We made continued strong investments in our capabilities to serve customers better. The international businesses have continued to improve while our digital offerings are witnessing increased activity, giving the business impetus to continue growing,” said Mr Oigara. “Going forward, we are emphasizing on driving more sustainable growth, excellent customer experience and diversification.” International Subsidiaries The banks says despite a tough operating environment in the countries it operates in, the international business (excluding the Kenya subsidiary) posted improved performance. The combined after-tax profit increased 8 per cent to Sh1.3 billion. Other than the Ugandan business, the rest of the four banking subsidiaries returned a profit.

For More of This and Other Stories, Grab Your Copy of the Standard Newspaper.

According to KCB, the acquisition of the National Bank of Kenya (NBK) is expected to further cement the lender’s position in the domestic banking sector and strengthens its ability to access more business flows. On November 1, NBK announced profits before tax of Sh675 million for the period ended September 30, 2019, representing a 45 per cent growth from a similar period in 2018.

SEE ALSO : Court quashes bid to stop NBK sale pact

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KCB Group Joshua Oigara

KCB Kencom branch tellers serve customers. PHOTO | ANTHONY KAMAU | NMG Medium and small businesses slashed their deposits in microfinance banks by 62.6 percent in 2018 to Sh10.28 billion, fresh data shows.

A Central Bank of Kenya (CBK) sector report shows that micro, small and medium-sized enterprises (MSMEs), as they are popularly known, reduced their deposits by more than half from Sh27.5 billion held in microlenders in 2017.

The huge withdrawal of funds from microfinance banks reduced their share of total customer deposits from 75 percent in 2017 to 25 percent last year.

The drop in MSME deposits came as they increased their deposits in commercial banks by 11.5 percent to Sh653.6 billion in 2018 compared to Sh585.8 in 2017.

The shift is largely attributed to increased stability of commercial banks compared to the loss-making microfinance segment that has struggled in the last few years.

“Overall, more banks are now offering MSME differentiated products and service from those for their retail and corporate clients signalling the change of business model by institutions,” said CBK in its annual supervision report.

“Short-term credit facilities continue to be the most popular financing option for MSMEs. Overdrafts were the most preferred financing option for MSMEs within commercial banks.”

Despite the growth in deposits, banks reduced their MSME lending portfolio by Sh19 billion to close the year with a total of Sh393 billion lent to the firms.

This represents a paltry 15.8 percent of the total sector’s loan book.

The shrink in lending to small businesses had largely been blamed on the repealed rate capping law.

The cap cut private-sector loan growth because banks avoided lending to customers deemed as risky, including small businesses.By definition, MSMEs are categorised into micro (one-nine employees), small (10-49 employees) and medium (50-99 employees).They are estimated to contribute about to about 33 percent of the gross domestic product (Sh3 trillion out of the country’s output of Sh8.9 trillion in 2018).According to a 2016 survey by the Kenya National Bureau of Statistics, MSMEs at the time employed up to 18.9 million Kenyans. The majority of these workers were stationed at unlicensed firms with only four million working in licensed establishments.Also according to the report, the country had more than 1.56 million licensed MSMEs while 5.85 million were unlicensed.

A month after being placed under receivership, Mumias Sugar Company has sent home all its employees

Ponangipalli Rao, the receiver appointed by Kenya Commercial Bank (KCB), indicated the cash-strapped sugar miller will hence force hire staff on a temporary basis.

“Consequent to the company being placed in receivership, all employees contracts stand terminated from the date of receivership i.e 20th September 2019,” Rao said in a statement.

Rao further noted that the company will duly compensate all the persons affected by the layoff.

“Any payment to the affected employees shall be dealt with in accordance with the provision of the law. Accordingly, the Receiver shall engage the services of any employee on a temporary basis on mutually agreeable terms until the time when the operations resume.”

“Priority will, however, be given to the past employees while recruiting the staff on a temporary basis until the time when the company’s operations are revived,” the statement stated.

KCB took over the company’s operations on September 20th following the execution of a lender’s agreement deed.

Individual shareholders hold the majority stake at 71.35 percent followed by the government (20 percent) and 10 percent by other companies.

The debt-ridden company last released its financial results in 2017 for the year ending June 2016, posting a net loss of Sh4.73 billion.

The layoff affects 732 employees comprising 433 permanent staff and 319 contracted workers, according to the company’s disclosure dated September 30th, 2019.

KCB bank opened its representative office in the country in 2015 has recently said it looking to make its entry through a partnership with a domestic bank or opening a fully-fledged subsidiary in the country.

Equity bank has been eying the country in a course to establish a full presence in 10 African countries, according to The Star.

Equity Group expects to make an impact in the Ethiopian market in 10 years due to the country’s protectionism.

The Kenyan based lender opened its representative office in Ethiopia in June 2019, as part of its Africa expansion and amid competition from Kenya Commercial Bank Bank that is also eyeing external markets.

The Ethiopian banking market is dominated by two state-owned banks- Development Bank of Ethiopia and Commercial Bank of Ethiopia that control 70 per cent of the market share.

In recent Africa’s Top 100 Banks 2019, foreigners are still not allowed to own shares in Ethiopian banks, although this is being relaxed into accommodate Ethiopians with foreign passports.

Despite the country being restrictive on its financial and telecommunications sectors, Equity sees it as promising market.

“It will take about 10 years to disrupt the Ethiopian market and become a leader,” the Group’s chief executive James Mwangi said during the release of lender’s Q3 financial results.

“We have started understanding intricacies of the place, skills distributions, analysing and creating partnerships.”

Martin Oduor Otieno East Africa Breweries Board has appointed Martin Oduor Otieno as the chairman of the group effective January 1 next year. Oduor is currently the chairman of Kenya Breweries Limited and UDV both subsidiaries of East Africa Breweries Group. He holds an honorary doctor of business leadership degree from KCA University, executive MBA from ESAMI/Maastrich and Bachelor of Commerce degree from the University of Nairobi. He has worked more recently with Deloitte East Africa as a partner and with KCB Group as Chief Executive Officer besides serving also as permanent secretary, Treasury. He moved into leadership consulting and coaching after serving as the Chief Executive Officer of Kenya Commercial Bank (KCB) for nearly six years, and was also the CEO of KCB Uganda Limited, KCB (Tanzania) Limited, KCB Sudan Limited and KCB Rwanda SA. Before joining KCB, Otieno worked for Barclays Bank for more than four years, where his roles included Head of Reporting and Compliance for the bank’s Africa Regional office in Johannesburg. The Kenyan government honored him as a Chief of the Order of the Burning Spear, in recognition of his work on national development.

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Martin Oduor Otieno EABL Kenya Breweries