A Nakumatt outlet. The chain is acquiring Shoprite stores in Tanzania. Photo/FILE
What you need to know:
Tanzania competition watchdog says it needs 3 months to give decision on Sh4bn deal.
Nakumatt, Kenya’s largest retailer, will take over two Dar es Salaam Shoprite stores and one in Arusha at an estimated Sh4 billion.
Nakumatt will finance the deal though commercial banks.
Nakumatt Holdings has to wait until mid-year to formally acquire three branches of South African retailer Shoprite after the Tanzania competition watchdog postponed approval of the takeover.
The Tanzanian Fair Competition Commission said it needs three more months to deal with the matter that has been in its in-tray since January.
The new stores were set to change hands this April, but Nakumatt Holdings’ head of strategy and operations Thiagarajan Ramamurthy told the Business Daily on Friday it now depends on Tanzania’s regulator.
Nakumatt, Kenya’s largest retailer, will take over two Dar es Salaam Shoprite stores and one in Arusha at an estimated Sh4 billion. Nakumatt will finance the deal though commercial banks.
“We are not sure when we will take the new stores since we have been told by Fair Competition Commission of Tanzania to wait for an additional three months,’’ said Mr Ramamurthy who did not want to go into details of the cause of delay.
Efforts to get comments from Tanzanian’s Fair Competition Commission (FCC) public relations manager Frank Mdimi were fruitless as he was not in the office.
The commission is mandated with promoting effective competition in trade and market and protects consumers from unfair and misleading market practices.
“We are not certain when approval will happen, but what I can confirm to you is that we have not laid off former Shoprite employees and we are optimistic everything will go through,’’ said Mr Ramamurthy.
He said Nakumatt has now opted to rebrand the new stores, riding on the popularity of their older shop in the country. Nakumatt Holdings managing director Atul Shah had earlier said no rebranding would be done.
Earlier this month, Nakumatt contracted Hipora Business Solutions East Africa Ltd, a Kenyan logistics firm specialising in verification of supermarket supplies to reduce losses, to recruit personnel for the Shoprite stores.
The team has not yet started operations due to the Nakumatt and Fair Competition Commission unfinished business.
‘‘Yes it’s true Nakumatt outsourced our services to recruit on their behalf personnel to verify supermarket supplies during stocktaking to reduce losses, but the delay in approval has jeopardised the activity,’’ a senior manager who was involved in the recruitment that took place in Tanzania told the Business Daily on Friday.
Shoprite opened its first shop in Tanzania in 2001 and its exit came after the Tanzanian government cautioned it against importing most of its consumer products from South Africa.
The South African retailer is said to have been importing up to 80 per cent of its products from home.
Shoprite was one of the biggest retailers in Tanzania ahead of rivals such as Shreejis Supermarkets, Shoppers Supermarkets and the high-end Village Supermarkets. It is estimated to have about 500 employees.
Mr Ramamurthy said Nakumatt will address this concern by buying most products from Tanzania while getting a certain percentage from Kenya.
“Our focus will be to support local manufactures by buying most of the products from them,’’ he said.
The buyout of Shoprite by Nakumatt is set to deepen its presence in Tanzania where it opened its first branch in Moshi in 2011.
Nakumatt has approximately 50 stores in East Africa including Rwanda and Uganda.
Tuskys Supermarkets, Kenya’s second largest retailer, has a presence in Uganda. Uchumi Supermarkets, the third largest retailer, also has a regional presence with outlets in Uganda, Tanzania and Rwanda besides cross-listing at the Kigali Securities Exchange.
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