Companies

Uchumi signs property lease for entry in Rwanda market

Uchumi-shopping

Shoppers at an Uchumi outlet in Nairobi. The retailer's profit grew 20.4pc to Sh485.9 million in the year to June. FILE

Uchumi Supermarket has signed lease contracts with a Rwanda-based property firm as it prepares to open two outlets in Kigali.

The retailer, which has 30 outlets in Uganda, Tanzania and Kenya, will open the two stores before December 2014 ahead of a national rollout in Rwanda where it cross-listed its shares in October.

The sole listed retailer in East Africa is racing to reduce its reliance on Kenya in a regional economy that is fast-expanding and creating a growing middle class with disposable income.

“We signed the construction contracts about two weeks ago and we expect the buildings to be complete within the next 12 months,” said Jonathan Ciano, Uchumi’s chief executive.

“We also expect so sign two more such contracts next year to build more outlets in other towns. The Rwandese retail sector is vibrant and in a lot ways similar to Kenya and Uganda.”

Uchumi’s foray into Rwanda will see it go head- to-head with its main rival Nakumatt Holdings, which has two branches in the country where it made its debut in 2008. The retailer will also be seeking to eat into the market of local chains such as Simba Supermarket.

Uchumi, which is aiming to offer up to 100 million shares in a rights issue set for next year, is also planning to expand its network of outlets in Kenya, Uganda and Tanzania as well as venture into the restive South Sudan and Burundi to tap new shoppers.

READ: Uchumi raises rights issue target above Sh2bn

The cash call is one of the reasons Uchumi cross-listed its shares on the Rwanda Stock Exchange to help it broaden its range of shareholders ahead of a share sale. “Once we have established ourselves in Rwanda, it will be easier to penetrate the other markets,” said Mr Ciano.

Uchumi emerged under Ciano’s stewardship from a four-year receivership in early 2010 and its share was re-admitted for trading on the bourse in mid-2011.

Uchumi’s profit grew 20.4 per cent to Sh485.9 million in the year to June on rising sales, which stood at Sh14.2 billion up from Sh13 billion a year earlier. Kenya contributed 85.5 per cent of the firm’s sales with the rest coming from its Tanzania and Uganda subsidiaries — a share the retailer is seeking to reduce with its East Africa expansion plan.

The retailer said last month that it would open 13 new stores before next June and commit millions of shillings to the refurbishment of its existing stores.

Uchumi aims at reclaiming market share lost to rivals Tuskys, Nakumatt and Naivas, which have in recent years been on an expansion blitz.