What you need to know:
The Shah family moved to and settled in Nakuru in 1965 where they started a retail store.
- Shah found a job as a salesman in a shop called Nakuru Mattresses, which was owned by his brother Hasmukh.
In the end, it was only fitting that it should be Tuskys Supermarkets bailing out the ailing giant retailer Nakumatt, for theirs is an incredible story of family friendship and business partnership that is more than five decades old.
This week, representatives of the two supermarkets acknowledged that talks of a merger between them were under way, which would save Nakumatt from imminent collapse under the weight of an elephantine debt estimated to be more than Sh20 billion.
If it goes through, the deal will continue an unlikely business partnership that was borne out of the many fears that foreigners — mostly Europeans and Indians — had about the new African government of independent Kenya.
The Sunday Nation was told the incredible story about the intertwining histories of Nakumatt, Tuskys and Naivas supermarkets by Mr Daudi Kanja a close friend of Dr John Kago, the current chairman of the Tuskys.
Soon after taking power in 1963, President Jomo Kenyatta announced that his government would embark on a process of gradually nationalising foreign-owned businesses as a way of empowering black Kenyans.
One of the many Asians who worried that his business would be appropriated by the Kenyatta government was Mangalal Shah, a small-scale trader who had emigrated with his family from India to Kenya in 1947 to seek better fortunes.
After initially setting up businesses in Embakasi, Nairobi, Kisumu and Elburgon, the Shah family moved to and settled in Nakuru in 1965 where they started a retail store, which mainly stocked clothes and cloth materials.
Being one of the few cloth retailers in the town, and the ideal location of Nakuru as the gateway to the western part of the country, meant brisk business for Mr Shah.
Within a few years, he had bought a commercial building in the town.
However, anticipating the government to appropriate his property for less than its worth, Shah approached Joram Kamau, a friend and a fellow enterprising young man to buy the building for Sh90,000.
“It was his (Shah) belief that if Joram owned it, he owned it as well,” Mr Kanja said.
At the time, Joram was the proprietor of Rongai General Stores Ltd, a company that was based in Rongai town, Nakuru County. His store was doing very well too.
Rongai, a small dusty town located five kilometres off the Nakuru-Eldoret highway at Salgaa trading centre, had been given an economic boost by an Italian-owned transport company — Rongai Transporters — which was based there and which was distributing goods across East Africa.
Over time Rongai became a stopover point for trucks going to other parts of the country as well as Uganda and Rwanda, a legacy that lives to date.
“There were many employees who had money and this boosted Joram’s business,” Mr Kanja said.
It was during these times that Joram and Shah met and developed a close friendship.
However, despite the fact that his business was doing well, Joram did not have the money that his friend was asking him for the building.
“The largest amount Joram had ever handled until then never exceeded Sh6,000 and now he was being asked for Sh90,000! He did not even have a bank account,” Mr Kanja disclosed.
The National Bank of Kenya (Nakuru branch) accepted to finance him to acquire the building but on the condition that he deposits Sh20,000 first.
It was a standard requirement for anyone who wanted to open a bank account in those days to deposit some money first as security.
Joram shared his predicament with Mr Shah who agreed to loan him the Sh20,000 deposit in order to unlock the Sh90,000 loan, thus making the former one of the first Africans to own a building in Nakuru town.
“Joram struggled to repay the loan, at times with many threats to auction the property due to either delayed payments or non-payment at all.
"He inwardly blamed and praised Shah in equal measure — on one hand for putting him in a financial fix, but on the other hand, for making him own a business building in town, an awesome achievement for an African immediately after independence,” Mr Kanja said.
Both Shah and Joram initially thrived in their respective businesses, but by 1970s Shah’s clothes business underwent a sharp reversal of fortunes after some of his large customers defaulted on paying.
He went bankrupt and closed shop in 1976.
However, he found a job as a salesman in a shop called Nakuru Mattresses, which was owned by his brother Hasmukh.
Meanwhile his sons Vimal and Atul founded a store called Furmatt where they used to stitch and sell bedsheets.
The “coffee boom” that hit the East Africa as from 1978 as a result of the crop failure in Brazil lifted the buying power of their clients, which meant good news to their clothes business.
“Business was so good that by the end of 1979, we had paid off all the debts that my father had accumulated,” Mr Atul Shah, Mangalal’s eldest son and the current chairman of Nakumatt told a local newspaper a couple of years ago.
When Hasmukh told his brother that he intended to sell off his shop and move to the United Kingdom permanently, Shah and his sons thought it was a good idea to buy the store even though they did not have enough money.
So the elder Shah turned to his old friend Joram who gave him the title deed of the building in Nakuru town, which he used as security to get a bank loan to pay off his brother.
“The business did so well that several years down the line he had given back the title to his friend Joram whose friendship with both families became deeper and deeper,” Mr Kanja said.
Over the years Nakuru Mattresses, which later changed its name to Nakumatt, rapidly grew and expanded into a behemoth that we know today with 65 stores in Kenya, Rwanda, Uganda and Tanzania employing more than 5,500 employees.
Sometimes in the late 1980’s, Mr Kanja notes, Shah invited Joram to his home and told him that his business was doing so well that he and his sons had bought two business premises around Mfangano Street in Nairobi and that they were willing to offer them one of the premises.
Joram took the business premises and under Shah’s mentorship started Tusker Mattresses (now Tuskys) in 1990, which grew rapidly to be Kenya’s second largest retailer.
Tusker Mattresses did so well that at one point Joram decided to gift his younger brother Mukuha with Rongai General Stores, which was also equally doing pretty well.
Rongai General Stores through expansion gave birth to Naivasha Mattresses, later renamed (Naivas), Kenya’s fourth largest retailer today.
Despite its slow and painful decline that began mid last year, Nakumatt remains a very viable business given its strategically located stores throughout East Africa.
A number of deep-pocketed foreign investors have made bids to pump in capital to revive it on condition that Shah family relinquish control of the business.
This has proved too a bitter pill for the Shah family to swallow, giving away a company to a foreigner who will not understand the history and the sacrifices that made the supermarket what it is today.
Given their shared history, the Tuskys pill might be more palatable.