Nairobi News


Atul Shah: How debt took down my Nakumatt empire

For more than two decades, Atul Shah perched on the high pedestal of the regional retail business having built eastern Africa’s biggest supermarket chain, Nakumatt.

The Financial Times in 2010 even named the Nakumatt CEO as one of the top 50 influential businessmen in the world, alongside Equity Bank’s

James Mwangi and Nigeria’s leading industrialist Aliko Dangote.

But to Nakumatt’s suppliers, bankers and creditors, people whose businesses fed off the retailer’s runaway success, Mr Shah is now the cause of their sleepless nights.

The retail chain’s implosion has left it unable to service its debts. As the Nakumatt empire diminishes, the 56-year-old entrepreneur has remained in the shadows, never uttering a word in response to the piercing and unrelenting media coverage of the business’ miseries.

This stance is deliberate, Mr Shah said in an interview at his Ukay Centre office in Westlands, Nairobi.


“We have been bashed unrelentingly. I have chosen not to defend the truth or criticise lies being passed around. If I did so, people would still come up with new conspiracy theories,” he said.

At its peak, Nakumatt had 63 stores across the region — Kenya (45), Uganda (nine), Rwanda (three) and Tanzania (six) — with the retailer’s management estimating its worth at Sh40.7 billion.

Today, the regional branch count has nearly halved to 34, with 27 stores in Kenya, three in Rwanda and four in Tanzania. Most of these open branches are mere empty shells.

Nakumatt has shed over 1,500 jobs, reducing its staff count to about 2,500. Numerous court cases have piled against the retailer.

But what exactly yanked the wheels off the Nakumatt juggernaut, causing it to run aground? Mr Shah is quite clear on this: the business expanded too fast on borrowed funds; everything was fine until it was not.

According to Mr Shah, the clouds started gathering when Imperial Bank was placed under receivership in October 2015 and grew heavier when Chase Bank suffered a similar fate six months later.

A credit crunch resulting from the enactment of the interest rate capping law in October 2016 made it a perfect storm.


“The Nakumatt engine relied heavily on bank loans to roar on. For a long time, things were fine; we would repay the loans and readily get some more,” said Mr Shah, adding that each branch cost about Sh100 million to open.

“When the two banks collapsed, and the new law took effect, money dried up. Despite repaying our loans, nobody was willing to finance us. The cycle stopped abruptly; Nakumatt’s fuel was no longer available.”

When asked about the exact amount of money the business owes its suppliers and bankers, Mr Shah sidesteps the question, stating that “what matters is that it is a liability.”

The retailer is said to be in the red by between Sh30 billion and Sh40 billion.

To jumpstart its stalled engine, Nakumatt went shopping for an investor who was supposed get a slice of the distressed business with a cash injection of around Sh5 billion. This deal aborted and Haku, as Mr Shah is fondly referred to by his close friends and family, is not forthcoming with the reason.

“It just did not happen,” he said with a blank face.

The next question is what impact Harun Mwau’s divestiture had on the business.

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