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Nakumatt – A Crumbling Empire - Nairobi Business Review
Nakumatt – A Crumbling Empire
Nakumatt – A Crumbling Empire


The proud elephants adorning the entrance of every Nakumatt Supermarket must be shedding a tear or two every day that passes by. The long queues of happy customers are long gone. The numbers of frolicking customers, gracing past the majestic elephants, has considerably dwindled in the year. So much so, that at any given time the number of employees, in the branches that are yet to be closed, are usually more that the odd ball customers that can be seen sifting through the maze of empty shelves.

The suppliers are gone too. No more trucks reversing into its back doors to deliver the most diverse array of consumer goods seen in Kenya; fresh foods, furniture and fittings, clothes and cosmetics, electronics. The list was endless.

Nowadays, the much vaunted retail giant, is a former shell of itself. In Kenya, close to a dozen branches have been shut down, just this year alone. The outlook for its regional subsidiaries does not look rosy as branches in Uganda and Rwanda have shut down as well.

Short of a miracle, Nakumatt is gone. Gone too soon. Gone to the graveyard of corporate oblivion and into the case studies of failed companies in business schools. There is no turning back from this one.

On this article we take a walk through the many issues that have plagued Nakumatt over the years and how they brought the retail giant to its knees.

Debt and more debt

Nakumatt’s greatest problem seems to emanate from a cash flow crisis. The organization has amassed a staggering debt portfolio estimated at KES 30 Billion. But how did it get there? To understand the bizarreness of Nakumatt’s un-paralled debt crisis, one would need to understand and appreciate the business model of retail chains.

Nakumatt sells goods on a cash basis and pays suppliers on a credit basis. In this model, cash flows should never be a critical issue if well managed. It is therefore unclear how Nakumatt ended up in the unending maze of debts it now finds impossible to untangle itself from.

A plausible scenario is the channeling of business funds to non-core and unrelated businesses such as real estate. In this scenario, money meant for staff, working capital and payment of suppliers was directed away from the core business leading to a cash crunch. A debt frenzy then ensued to plug in the holes created by such an oversight.

An overambitious expansion strategy

Another source of the liquidity issues might have been an overambitious expansion strategy. Funding of the expansion strategy might have heavily contributed to the huge debts. In this strategy, Nakumatt opened stores in their dozens over the past decade. Opening up a store requires a significant cash outlay and stretches a company thin. New staff have to be recruited, trainings have to be conducted and the headaches of getting suppliers in the new region have to be sorted. Leases have to be signed, rent deposit stashed away and purchases of point of sale terminals among other investments.

Corporate governance

Nakumatt has always had an issue with its corporate governance model. According to an article by the Daily Nation ‘The company has in the past been forced to deny allegations of money laundering and tax evasion — with some claims contained in entries in WikiLeaks, a whistle-blowing website, linking it to the collapsed Charterhouse Bank.’

The Control and ownership structure of the company is also opaque. This means that it is impossible for the outsiders to gauge vested interests in the company. It is important to gauge vested interest as it gives independent analysts an insider’s view of the company and might give strategic insights into the vision and direction that a company is going to take.

This opaqueness has led potential suiters from saving Nakumatt. It has also been attributed as one of the reasons the retail giant failed to list at the Nairobi Stock Exchange.

Misappropriation of funds is also another indicator of corporate governance malpractices. An auditor of Nakumatt was executed gangland style and some of his colleagues are now in court facing murder charges.

A series of unfortunate events

In the past decade, the company has experienced a series of unfortunate events. Nakumatt Thika Road was demolished to pave way for the superhighway. Nakumatt Downtown burnt down in unclear circumstances in January 2009. In 2013, Nakumatt Westage was at the center of a terrorist siege. The loss of these lucrative hubs further fueled its untimely demise.


The truth is, we might never really know what happened to Nakumatt. We can only speculate. However, other Captains of Industries in Kenya can learn from its mistakes and the legacy it will leave behind. The legacy will be one of unbridled local entrepreneurship. Starting as a small retail chain and growing into a world class one stop shop.