Nairobi News

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Nakumatt woes deepen as workers’ salaries delayed

Kenya’s largest retail chain Nakumatt’s financial troubles appear to have deepened last month, causing serious cash-flow problems that have delayed payment of salaries for more than two weeks.

The supermarket, which runs the highest number of outlets in East Africa, had by Monday not paid 1,555 employees their May salaries but had more than 100 on compulsory leave, citing low business volumes.

The retailer, which has 5,700 employees in Kenya, said a delay in completing the restructuring of its business — which involves attracting fresh capital — has seen it fail to honour this monthly liability on time, leaving its staff in financial distress.

STATUTORY DEDUCTIONS

Some employees told the Daily Nation that Nakumatt has also not been remitting statutory deductions to the various agencies such as the National Hospital Insurance Fund (NHIF) and National Social Security Fund (NSSF), but the retailer insists they are up to date.

Nakumatt, which is planning to shut down nonperforming branches, on June 6 sent hundreds of employees at its Mombasa Road warehouse on forced leave following a dip in supplies that had left them “idle” for weeks.

The retail chain on Monday admitted that it had not paid the May salaries but promised that the matter would be settled next week.

“We had a delay in some salary payments. The restructuring has taken longer than anticipated and affected some of our liabilities,” Mr Andrew Dixon, Nakumatt’s marketing director, told the Daily Nation in an interview.

INFORMED STAFF

Mr Dixon said the retail chain had informed its staff of the looming delay and was “working to ensure that everybody receives their salaries this week.”

Nakumatt has in recent years been on a debt-funded acquisition spree that saw it take up space in multiple new malls, chalking up financing costs and disrupting cash flow.

The retail chain, which is awaiting a $75 million (about Sh7.7 billion) cash injection from an unnamed private equity fund, has in the past three months seen stocks disappear from its shelves as big suppliers such as Unilever stopped deliveries due to mounting debts.

Nakumatt has, since the year began, closed some stores in Uganda — a move that has seen aggrieved suppliers and landlords sue for non-payment of Sh515 million.

Uganda’s minister for veterans, Bright Rwamirama, last week took Nakumatt to court, seeking to be paid Sh58.6 million in rent arrears that he, and other partners, are claiming from the retailer for use of their premises in Mbarara.