Although the oil deposits identified in Côte d'Ivoire promise new resources for the state, negotiations with the many partners involved are ... still ongoing. To facilitate this, oil company Petroci is being transformed into a 100% state-owned company.
Kenyan retailer Nakumatt will permanently close its stores. The supermarket chain’s creditors gave the green light on Tuesday, 7 Jan, to liquidate the company.
- Some 38bn Kenyan shillings (€337m) are at stake, a debt that seems too big of an obstacle for Nakumatt’s creditors.
The retailer’s creditors include Kenya Commercial Bank (KCB), Standard Chartered Bank and Diamond Trust Bank, the representatives of which met with Peter Kahi, who was appointed administrator in 2018, as well as the company’s main suppliers and landlords.
Of the creditors who voted, 92% backed the liquidation, although they are only expected to recoup up to 46% of the value of their debt through tax refunds.
On 17 Jan., Kenya’s Court of Justice is set to decide whether or not to officially disband the supermarket chain, which has been in business for over 30 years.
Too big to fail
“It’s not surprising and I’m very sorry for commercial paper [an unsecured, short-term debt instrument] holders. Many of Nakumatt’s creditors held these debt instruments,” said Amish Gupta, one of the most well-known investment bankers on the Kenyan stock market. As an investment professional, he regrets the negative impact that such an event has on the financial credibility of Kenyan companies.
Experiencing financial hardship since 2017, the retailer’s 60 stores gradually closed one after another. Gupta, who is also a board member of Kenya Association of Stockbrokers & Investment Banks, finds that a number of Kenyan companies are run on a monopolistic model virtually free of regulation in the manner of businesses “too big to fail.”
These companies, the large size of which inspires confidence in their financial survival, enjoy non-restrictive legislation regarding debt management.
- For example, it was only last year that Kenya passed a law forcing companies to pay their suppliers within 90 days.
“It’s yet another failure for financial instruments and unsecured debt instruments,” said Gupta. “We need to go back to the drawing board in terms of how we regulate unsecured commercial paper in our public capital markets. Not just in Kenya, but all over Africa.”
What remains of Kenya’s business success story today: six stores.
Other local retail chains, including Tuskys, Chandarana and Quickmart, competed with one another for Nakumatt’s remaining assets, but ultimately Naivas outbid them all, forking over 422.5m Kenyan shillings (€3.7m) for the stores.
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