400 Ugandans lose jobs as Uchumi exits Uganda

Wednesday October 14 2015

One of the closed Uchumi  outlet

One of the closed Uchumi outlet at Garden City in Kampala. Photo by Abubaker Lubowa  

By Othman Semakula

Uchumi Supermarkets has announced closure of its operations in Uganda and Tanzania as it seeks to stop further financial bleeding.

In a statement released on Wednesday chief executive officer, Julius Kipng’etich said the two subsidiaries have been posting losses in the last five years, making a turnaround hard for the troubled retailer.

 “Our outlets in Uganda and Tanzania make up only 4.75 per cent of our operations yet they account for over 25 per cent of our operating costs,” he said, highlighting they would seek approval from shareholders to liquidate their operations in the two markets.

"All stores in both markets are now closed and will be liquidated." 

The closure, Mr Kipng’etich said would quicken the process to stabilize its Kenyan operations.

Uchumi has had a series of problems with its suppliers having accumulated a combined debt of more than Shs33b.

In Uganda, the retailer has been partially exiting, having closed two branches in Kabalagala,  Natete (Kampala) last week and Gulu this week.

On Monday Court Bailiffs, working on the directive of a court raided the chain’s main outlet at Garden City in Kampala, seeking to recover a more than Shs180m debt owed to Ugachick.

Ugachick is one of the supermarket’s poultry products suppliers.

Uchumi has been employing more than 400 people in its six outlets in Uganda.  

Accordingly, Mr Kipng'etich said they had informed the Capital Markets Authority in Kenya, Nairobi Securities Exchange and other key stakeholders but would go ahead to implement the decision pending approval from shareholders.

Mr Kipng'etich took over the troubled retailer following the sacking of former chief executive officer Jonathan Ciano, over what the retailer’s board said was gross misconduct.

However, Mr Kipng'etich noted they would re-enter the Uganda and Tanzania markets at an appropriate time, adding, “… we can now concentrate on turning around Uchumi by focusing on the 95 per cent of the business that makes money for shareholders.”

"It is important that we get Kenya back to optimal operations and profitability by taking good care of our suppliers and creating value for our shareholders before reconsidering regional expansion," he added.

 

 

 

 

 

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