The Kenya National Chamber of Commerce and Industry (KNCCI) is calling for information sharing between companies to avert business risks.
The chamber’s Nairobi chapter said although firms are naturally in competition, they should have joint mechanisms to discuss risks that could irredeemably hurt them.
“They should co-operate in information sharing, peer review and self-regulation to warn them of potential pitfalls and minefields before these translate to losses,” said Nairobi Chapter chairman Richard Ngatia.
He spoke in the wake of financial tribulations facing Nakumatt, which has been Kenya’s largest retail chain by number of outlets.
Nakumatt now faces liquidation after the High Court last week threw out a petition seeking to appoint a receiver manager.
In a better environment, creditors could have helped avert the current challenges facing the supermarket. More than 50 companies have joined a court petition seeking to declare the retailer insolvent.
Mr Ngatia said had there been forums to share information on the prevailing business environment, the debt woes facing Nakumatt could have been avoided.
The retailer’s experience, he added, should serve as a lesson to businesses to approach issues of mutual interest in a more structured and regulated way.
The retail chain owes creditors between Sh30 billion and Sh40 billion. Top creditors include dairy company Brookside (Sh457 million), furniture distributor Redstar International (Sh261 million), Kisima Management (Sh201 million), dairy processor New KCC (Sh290 million), Kenindia Insurance (Sh167.2 million) and Nexus Holdings (Sh103 million).
Others include Chania Veterinary Distributors (Sh97.9 million), Kevian (Sh90.2 million) and Haco Industries (Sh71.8 million).
“If the creditors, who had first suffered the pain of non-payment, had ventilated their frustrations within a structured institutional framework, other businesses would have been more careful in dealing with Nakumatt,” said Mr Ngatia.
Last week, the Competition Authority of Kenya (CAK) halted the planned merger of Nakumatt Holdings with Tuskys Supermarkets, saying Tuskys’ shareholders should first resolve internal wrangles.
CAK said the objector, who is a shareholder in Tusky’s Supermarkets, had raised issues relating to ownership of the supermarket, its financial status and viability of the intended transaction.
“It is prudent for Tuskys Supermarkets shareholders to resolve their disputes first,” said CAK.
But Tuskys continues to take over shop space vacated by Nakumatt, with the latest being in Kisii and Kisumu, adding to its network of 57 branches in Kenya and seven in Uganda.
The country’s supermarket sector is, however, among the most attractive for long-term investors in sub-Saharan Africa, according to analysts at financial advisory firm StratLink in their latest monthly update.
Besides Tuskys, South Africa retailer Shoprite is eyeing the business gap left by Nakumatt.
Mr Ngatia noted that organisations that do not comply with statutory regulations, apply minimum standards of corporate governance and honour their contractual obligations must be flagged out at the earliest opportunity.
“….so that anyone dealing with them exercises extreme caution and otherwise takes measure to mitigate any losses that may result from that engagement. It should be possible to save the retailer and retain the value in the brand before it is too late. This is an idea whose time has come,” he said.