How politicians, land row choked Uchumi’s revival

Uchumi Supermarket

Uchumi Supermarket along Aga Khan Walk Nairobi on January 12, 2020. The branch has since closed.

Photo credit: File | Nation Media Group

When Uchumi Supermarket hit a tough patch nearly a decade ago, it believed the ground on which it stood, land, could hold firm; it turned out even that soil was shifting. Unlike Nakumatt, Ukwala, Tuskys, Deacons, Karrymatt, and the long list of retailers, which have collapsed Uchumi was confident of making a return since it had assets other than empty shelves and dead stock.

The oldest retailer in Kenya was banking on turning acres of prime property in the city that it was carrying in its books into billions of shillings that would offset its Sh4.2 billion debts. Now the parcels scattered across Nairobi from Langata, to Ngong and Kasarani are either gone or seized and Uchumi’s claim has been reduced to corridors of justice and State bureaucracy that may never let the retailer come back.

The only land Uchumi managed to sell was Ngong Hyper where the retailer expected Sh500 million that would be used to refinance the business. When it was sold, however, KCB Group seized the proceeds instead and left the company on the dry forcing Uchumi to turn to Langata land.

“Kenya Commercial Bank (KCB) used the proceeds to settle loans and overdrafts for Kenya and Tanzania operations. This was contrary to an earlier arrangement of partial settlement between the bank and Uchumi. At the time, Uchumi was unable to secure any further bridging facilities with banks due to the insolvent position and growing Uchumi risk curve,” the company said in a letter to the Ministry of Trade.

UBA Bank had watched KCB move on the retailer's land and sought to sell Uchumi’s Supermarket land situated on Langata Road over a debt of Sh172 million.

The lender says Uchumi has been in default of its facility for years, terming it a huge concern to both the bank and its regulators given the negative impact it has on its depositors’ funds.

The lender said it is in the interest of justice and fairness that it is granted leave to enforce its security. As the lender battled in court for the land, the military swung in and orchestrated a compulsory take over of the 3.7 acre parcel of land situated on Langata Road estimated at a market value of Sh245 million.

The government gazetted a notice for compulsory acquisition of the land, which is part of parcels earmarked for the military.

While this would mean that at least the retailer would get compensated, this would depend on State bureaucracy and may come a little too late for the retailer, which is facing creditors at the end of this month to decide on its fate without anything on the table.

Uchumi has not had the best of success combating the military who also took over its last parcel of land, a 17 acre piece in Kasarani.

Uchumi’s last hope had been on the land it had bought from former President Moi and his associates in 2001 for Sh85 million.

It turned out the land now valued at Sh2.8 billion was fraudulently acquired by Solio Construction Company Limited, which was partly owned by Mr Moi.

It turned out the company practically got the land for free in 1999 in an irregular transfer signed by land officials while the property remained under Mayer Jacob Samuels, an Israeli who died in 1974.

Mr Samuels’s death unleashed the vultures on his property including officials at the Nairobi County who subdivided the land and issued allotment letters to squatters who claimed they were his former employees.

A parliamentary probe shows the squatters some of who were too young to have been the late Samuel’s workers claimed they took possession of the land after his sons left the country having failed to resolve their father’s ownership of the land.

With the owner dead, and his leasehold expired the military also lay claim on the piece even though it had not paid for it.

The army had sought to buy the land from Mr Samuels who asked for Sh25 million but the government offered Sh3.5 million.

He refused the offer and went to court which confirmed his asking price at Sh23 million. However, the government never paid him and although the Sh3.5 million was deposited in court during the hearing there was no evidence that the money was wired to Mr Samuels or his beneficiaries.

The military also felt their financial position did not warrant buying property right in the middle of a residential area that would require buying adjacent properties to secure the area.

The military’s only interest in the land is noted by Major General Munyao’s 1987 letter to the commissioner of lands asking them to disregard the military advisory that appeared to reject the land.

Over 30 years later the military remembered the land and earmarked it for senior non-commissioned officers hosing under the affordable housing programme.

It is at this time that Uchumi was also signing a deal with Jewel Complex, a company belonging to the Jesus Winners Ministry, which had committed to buy the 20-acre piece of land for Sh2.8 billion.

KDF moved its equipment and set up a camp on the prime parcel in Kasarani, near the Thika Superhighway claiming 17 acres of the property, creating a standoff with the cash-strapped retailer.

The church agreed to buy the three acres not in dispute pending approval from the Trade ministry led by Cabinet Secretary Betty Maina.

It is unclear why the government has not cleared Uchumi to sell the property even after the retailer obtained a no objection letter from the military to dispose of the parcel.

Now, the church group that bought part of Uchumi’s Kasarani land is demanding a refund of Sh401 million plus interest if the retailer fails to close the transaction in 21 days.

Jesus Winners Ministry said they had taken out a loan and paid the money to the retailer but have waited four years to conclude the transaction that is now stuck in the Ministry of Trade.

The church has now issued a 21-day ultimatum to the retailer to either conclude the sale or refund the money with 24 percent interest on the deposit.

Uchumi Supermarket is yet again facing collapse, its vast lands having failed to help in its rescue. The government has promised it shareholder loans of up to Sh600 million but this often has come in late and in small doses insufficient to save the retailer.

In September 2016, the government of Kenya approved the injection of Sh1.8 billion within 90 days. By the time the first tranche of Sh500 million was wired in January 2017 Uchumi’s expenses and current trade creditors had accumulated arrears of Sh720 million and it was under intense pressure to settle these obligations. The second tranche that was anticipated within the next 30 days, was received in December 2017 almost 10 months later.

Uchumi is still waiting for money from the government for compulsory acquisition of its land and approval to sell the three acres as its last hope before angry creditors vote to shut it down next week.