Twitter/ @Nahashonprecio2 Tuskys, a Kenyan family-owned retail chain with a presence in Uganda, is on a government watchlist after it failed to pay its suppliers on time.
While the chain’s management has blamed the reduction of footfall traffic due to the COVID-19 pandemic, investigations by the country’s competition watchdog found its debts preceded the pandemic, and that the chain had also under-reported its debt obligations.
“The [Competition Authority of Kenya], through its own intelligence channels, in mid-April received information that there could be retail supermarkets who are failing to pay their local suppliers on time,” Mugambi Mutegi, CAK’s Communications and External Relations Manager told the press in mid-May.
After analysing the debt portfolios of 25 major retailers, the watchdog said four of them were in debt distress, but three were working on getting back on track.
“Three (3) of the four (4) retailers presented payment plans and have continuously reduced their debt portfolio, aiming to settle the outstanding amounts within the next 60 days,” CAK’s Director-General Wang’ombe Kariuki said in an emailed comment on 17 June.
The other, presumably Tuskys, did not present “a payment plan or evidence of negotiations with the affected suppliers.”
Tuskys had reported debts of KShs884.3m ,which it then revised downwards in early June, before the competition watchdog independently found it had under-reported the debt burden by KShs1.2bn. It is now under a regulator-mandated payment plan, as well as a weekly government review process.
Tuskys will now need to seek approval form CAK before it can move onto paying bonuses to directors. Gradual collapse
Tuskys’ empty shelves are reminiscent of a “2016 Nakumatt”, one shopper told The Africa Report , referring to the gradual collapse of one of the country’s most recognisable brands. Once Kenya’s most successful and recognizable retail chain, Nakumatt collapsed in phases, before its creditors -whom it owed a total of KShs. 38 billion- decided to liquidate it in January 2020.
READ MORE Kenya: Liquidation of Nakumatt rattles Nairobi’s stock market
On Thursday, 18 June , a court in the coastal city of Mombasa issued an arrest warrant for Atul Shah , Nakumatt’s former CEO over a debt owed to a landlord.In addition to private investigations by creditors into Shah and his family network’s properties, the CEO is also under investigation by the country’s investigative agencies for theft and money laundering.Although many of its creditors have since moved on, those who showed up to vote for its closure […]