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Uganda intervenes in Shs8.8 billion Uchumi debt to suppliers

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Court bailiffs auction items in front of former Uchumi Supermarket, Gulu Branch on Monday December 14 2015. Photo BY JULIUS OCUNGI 

By ISMAIL MUSA LADU

Posted  Wednesday, January 20  2016 at  02:00

In Summary

Out. The retailer has closed Ugandan outlets and filed for bankruptcy.

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Kampala.

The Ugandan government is engaging Kenya over the matter of aggrieved Uchumi Supermarket suppliers, promising that it will do whatever it can to ensure they get paid.

The permanent secretary ministry of Trade, Amb Julius Onen, confirmed the development, saying the ministry has since intervened, with the matter set to be discussed at the bilateral level early next month.

When asked in an interview on Monday, he said: “We have requested for a special session with Kenya to talk about this issue—non-payment of suppliers.”

He continued: “This is a matter we are now handling at the bilateral level. We have already made our request through our High Commissioner in Kenya, and very soon, we shall have that meeting to talk about this very specific issue.”

Last week, the ministry organised a meeting with the aggrieved suppliers and the relevant stakeholders to forge a way forward with a view of ensuring that the suppliers are duly paid.

In a closed-door meeting at the ministry office in Kampala, it emerged that the defunct Kenyan supermarket did not only fail to pay their suppliers an estimated (as of last week) shs8.8 billion, according to Private Sector Foundation Uganda (PSFU), but it also defaulted on tax payment.

The gathering tasked PSFU, the private sector apex body in the country, to compile evidence of non-payment which the government will table in the upcoming bilateral engagements with the government of Kenya scheduled for next month.

PSFU communication and public relation manager Sarah Nakibuuka, when contacted last week, said the evidence compiled in form of receipts and invoices, currently valued at nearly Shs8.8 billion, will also be used to petition several other institutions including Parliament and courts of law.

She said the estimated Shs8.8 billion so far does not tell the whole story as some suppliers are yet to submit their invoices. She said the amount owed could hit a trillion Shilling mark if all heed the call to submit their invoices.

After four years of operation, late last year, Uchumi Supermarket closed shop in Uganda, rendering about 400 people jobless.

Stabilising Kenya operations
Press reports quoted the retailer’s chief executive, Mr Julius Kipng’etich, as saying the company’s board had decided to close down regional units in order to speed up the process of stabilising its Kenyan operations.

“Our outlets in Uganda and Tan zania make up only 4.75 per cent of our operations yet they account for over 25 per cent of our operating costs. The two subsidiaries have not made any profits over the last five years, which means they have been draining the parent operations,” Mr Kipng’etich is quoted as having said in earlier press reports.

Past incidences
This is not the first time Ugandan traders (and suppliers) have found themselves trapped in a similar predicament. About eight years ago, despite several promises and high level engagement between the two governments - Uganda and Kenya, Ugandan traders who lost their properties as a result of the 2007/08 Kenya electoral violence are yet to be paid.

Ugandan traders lost properties valued $14m (Shs48b) during the post-election violence of 2007/08.
Also, for years now, Ugandan traders who supplied South Sudan with grains are yet to be paid their balance of slightly more than Shs120 billion by the South Sudan government.

According to the chairman Uganda South Sudan Grain Traders and Suppliers Association, Mr Chris Kaijuka, several attempts to have them paid, including at the highest level of presidency, and are yet to bear fruit.

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