Nakumatt Folds

The Daily Nation today (December 17) has a story about the closing of Nakumatt after efforts to revive it appear to have been abandoned. The Nation has learnt that the chain has now sold what was left of the six branches to rival Naivas Supermarket in a deal that will see the Nakumatt brand completely disappear by the end of the year.

The last five years have been a roller-coaster period for Nakumatt. Here are some highs and lows taken from news reports and press releases.

May 2014: Nakumatt opens its 46th branch in Kitale and its third in the North Rift area – a Kshs 140 million investment, located at the new Mega Centre mall.

August 2014: Nakumatt opens its 50th branch in Arusha, Tanzania.

July 2015: Nakumatt unveils its store at the refurbished Westgate mall that had been closed following a terrorist attack in September 2013. The media tour will be followed by a tree planting session at the new Mwanzi-Kabete road link recently developed by Westgate Mall Management in association with the Nairobi City County, to ease traffic flow.

March 2016: Nakumatt opened its 59th store at Kakamega and its second in that town. That month, Nakumatt also opened Sports Planet, a sporting gear store at Westgate.

May 2016: Nakumatt opened its 60th and 61st branches respectively – at Emali town along the Nairobi-Mombasa Highway and in Nairobi’s Kitisuru suburb.

December 2016: Nakumatt management projects having a good festive season stretching from Diwali through Christmas, with expectations to improve sales by 34% over the previous year at their 62 branches across East Africa. They later opened their 63rd store, a 60,000 square foot space, at the new NextGen Mall in Nairobi located on Mombasa Road to serve customers in the South B and South C areas. They are also at an advanced stage to open a 64th one in Kigali, Rwanda.

October 2017: The directors of Nakumatt Holdings apply to the High Court on October 30 for the company to go into voluntary administration under the Insolvency Act. They propose that Peter Kahi of PKF Consulting be appointed as an Independent Administrator to turn round the business and work with Nakumatt’s creditors. The directors chose this route as the administration will enable Nakumatt to be maintained as a going concern and to continue to trade and generate revenue to meet its ongoing financial obligations. Under the Act, while a company is under administration, there is a moratorium on certain legal processes, including a moratorium against enforcement of security over the company’s property

The notice reads that rival Tusker Mattresses (Tuskys) has undertaken to investment in and merge with Nakumatt. Also, that banks are supportive of this move and the Competition Authority of Kenya has been notified of the Tuskys deal.

December 2018: Nakumatt moves into a smaller 40,000 square foot store that they had first occupied in 1989 at Mega Mall, along Uhuru Highway. This is in the building next to their former “Mega hypermarket” that was one of their flagship stores. Nakumatt now operates just seven restocked branches in Nairobi, Nakuru and Kisumu under a business recovery programme dubbed Nakumatt BounceBack, that is supported by scores of local and international suppliers keen on seeing the firm back on track.

September 2019: A second meeting between the Administrator and Nakumatt’s creditors fails to happen as the financial audit of the firm for the years 2017, 2018 and 2019 have not been completed. Earlier the Court had directed an audit be done, and the firm of Parker Randall Eastern Africa had been selected after a bidding process. The Administrator also disclosed that four stores operating at break-even levels, a status that the other two would attain by year-end.

January 2020: 92% of Nakumatt creditors voted on Tuesday January 7 to dissolve the supermarket chain. A liquidation plan was presented by Peter Kahi, the court-appointed administrator who said any further efforts would be very costly. The creditors are owned Ksh 38 billion and the administrators will share about KSh422 million received from the sale of six Nakumatt branches to Naivas. Diamond Trust Bank (DTB) KSh3.6 billion, KCB Group Ksh1.9 billion, Bank of Africa KSh328 million, UBA KSh126, Guaranty Trust Bank KSH104 million. Brookside Dairy Limited KSh457 million, Outstand Logistics Limited KSh415 million, Norkan Investments KSh338 million, New KCC KSh290 million, Redstar International KSh261 million. – Via Khusoko

Others: See also posts from when Nakumatt fought against tax evasion claims in June 2006 by releasing some never-seen financial numbers, and when an equity deal was formulated in November 2016.

Baraza Media Lab launch

This week saw the launch of the Baraza Media Lab in Nairobi as part of an initiative to foster more collaboration towards a better future for journalists and media to tell their stories.

The Baraza Lab is a $1 million investment that is supported by the Luminate Group which is a spinoff of the governance and citizen engagements funded by the Omidyar Network. Ory Okolloh, the Managing Director, Africa for Luminate said that different media organizations were dealing with their industry problems in their own silos. The new Baraza lab, which is being run in collaboration with Mettā Nairobi, is a place where like-minded creatives could meet, share, and collaborate on the future of media.

At the launch, it was said that no industry has been as disrupted by technology as much as the media, whose business models have been eroded by new advertising platforms. This is also a time when propaganda and fake news divides societies and where personalities had more followers than countries. Yet media remains a necessary arm of inclusive and democratic societies, and organizations such as AmaBhungane and Africa Uncensored were cited as two entities that had done a great deal to expose corruption issues in South Africa and Kenya, respectively.

Media coach and “recovering” journalist Uduak Amimo, who was the keynote speaker at the launch, spoke about the revelations and opportunities brought on by new media in the last few years. As an example of collaboration, she said that the data dumps by Wikileaks had not made much sense until the organization partnered with traditional media houses. But the opportunities for media had been hampered by a focus on profits over purpose, media that shared messages that they had not checked or analyzed, pay discrimination and tolerance of harassment among other factors.

NSE Charity Day 2019 supports the fight against cancer.

The fifth Nairobi Securities Exchange (NSE) Charity Day held today spotlighted the prevention and management of cancer in Kenya.  All the day’s equities trading fees will be donated to the National Cancer Institute of Kenya, a body that has been mandated to coordinate all cancer management activity including research and the setting up a national cancer registry.  

NSE Vice Chairman Bob Karina said that previous Charity Day’s had been staged with different themes and raised over Kshs 30 million to support identified worthy causes. The NSE supported wildlife conservation in 2015, the environment in 2016, and girl-child protection in 2017, while last year they supported education endeavours. The NSE Company Secretary Kuria Waithaka mentioned organizations that have received support from previous “charity days” included SOS Children’s Home, Joy Children’s Home, Save the Elephants and the Borana Ranch Conservancy – where the NSE had adopted and named a rhino “Hisa,” which is Swahili for ‘shares.’

Barclays Kenya’s Head of Markets, Anthony Kirui said that the Barclays which had been a partner of the NSE Charity Day for the last three years was in the final stage of its brand transition to Absa. The new identity was being rolled out with a strategy to put customers at the front and some of the tailor-made services the bank now has include unsecured credit for small & medium enterprises (SME’s) of up to Kshs 10 million (~$100,000), and LPO financing of up to Kshs 50 million, while mortgages can be 100% financed.

Kenya’s Cabinet Secretary in the Ministry of Health, Sicily Kariuki said that the country recorded 48,000 new detections of cancer and 33,000 deaths every year and that everyone knows someone who has been affected or has fundraised towards someone’s cancer treatment.

She added that while the Government was investing in interventions in the cancer fight and to reduce the cancer burden through new radiotherapy and cancer centres, 80% of the fight was within people’s control; she asked that people mind their lifestyles, meals, physical activity, environments & communities, and go for early screenings.

Celebrity participants at the trading day included Sheila Mwanyigha, Terryanne Chebet Suzie Wokabi, Nameless, Patricia Kihoro, Pinky Ghelani  and June Gachui, among others, placed NSE client trades online and over phones working alongside real stockbrokers. The day saw 13.27 million shares traded worth Kshs 528.6 million with top activities being around Safaricom and Equity Bank.

Inside Kenya’s BBI (Building Bridges Initiative) Report.

Last week saw the release of a report from the Presidential Taskforce on the Building Bridges Initiative (BBI), that was the result of a March 2018 ‘handshake’ between President Uhuru Kenyatta and former Prime Minister Raila Odinga who had led different parties into the 2017 Kenya general elections.

The document is sub-titled Building Bridges to a United Kenya: from a nation of blood ties to a nation of ideals and its authors claim to have incorporated the views of about 7,000 Kenyans from all 47 counties.

One of the summarized findings was that elections are too divisive – and the country’s economy gets three good years that are interrupted by two-year blocks of intense electioneering campaigns.

Anyway, on to an alphabetical look at some of the Building Bridges Initiative (BBI) Report clauses.

Anti-Money Laundering: A bank involved in corrupt transactions should be made to repay all the money laundered through it, with interest.

Audits: Devolve the Office of the Auditor-General to the counties. Also, projects initiated in the final year of an electoral cycle should receive extra scrutiny from the Controller of Budget and all oversight authorities.

Capitalism: We have confused value extraction with capitalism (and) we as a people must build an economy that is dominated by value creation and not value extraction.

CCTV: Link private CCTV of hotels, shopping centres, and other highly trafficked sites to the National Police Service to deter terrorism and crime.

Cyclists: Every new road in an urban area should be legally required to also have a sidewalk for pedestrians and specified lanes for cyclists, with clear signage.

Doing Business Rankings (not the World Bank ones): Develop and launch a measure of ease of doing business for small Kenyan businesses and not just foreign investors. This should be a comparative assessment published annually by the Kenya National Bureau of Statistics and broken down by counties, cities, and towns.

(Fighting) Corruption: One of the summarized findings was a need to reverse the Ndegwa Commission and ban all public officers from doing business with the government. Another is that no procurement officer should be at a post for more than two years.

e-Government: Make Kenya a 100% e-services nation by digitizing all government services, processes, payment systems, and record-keeping. This should include the ability to offer Kenyans digital identities, e-health records and Kenyans should be able to vote digitally.

(Attitude to) Free Money: When money is known as ‘pesa ya serikali’ (Government money), it is something to plunder not respect; indeed, people who try to save public money are dismissed and even rebuked.

(Use of) Government Services: dubbed “skin in the game of leadership” – all ministers and county executives and leaders should use the services that they manage on behalf of all Kenyans. E.g. the children of the education minister should attend public schools and the health minister should use public health facilities.

History (of Kenya): President Uhuru Kenyatta should commission an official accurate History of Kenya, going back 1,000 years, whose production will be led by an Office of the Historian resident in the National Archives.

(Digitization of) Land Records: Complete the digitization of land ownership and give the public access to the database. Also, map and publicize government-owned land open for commercial leasing under simple and enforceable terms.

Loan Apps: Properly regulate loan apps which are driving up indebtedness of poor Kenyans to destructive effect with their shylock-level interest rates and borrowing from multiple platforms.

Marginalization: The marginalized should not marginalize others – strong evidence was presented that some communities that complained about marginalization at the national level were themselves guilty of marginalizing minorities in their respective counties.

Media: Kenya needs media that uplifts through investing in quality local content (and) should build programming around Kenyan histories and showing what is exceptional.

Mining: Concessional agreements, policies and regulations in mining and oil should be made public in an accessible manner, including clear accounting for the public participation and environmental impact assessments.

New bodies proposed in the BBI Report:
• A Health Service Commission to look at the human resourcing in the counties.
• A unified and assertive food safety and regulatory body to ensure Kenyan food becomes safe.
• Nairobi be accorded a special status as a capital city that allows the National Government to maintain it as a capital city and as a diplomatic hub.
• A commission to address current boundary conflicts until they are solved.
• (Compel the) Private sector to form a national, non-profit foundation, chaired by the President, that provides mentoring and support to aspiring business owners aged 18–35. It should match the young entrepreneurs with a business development advisor and a nationwide network of volunteer mentors.
• A Government-run national lottery to replace the private betting industry (which is leading to hopelessness and greater poverty)
• A Sovereign Fund that allows for savings in case of emergencies or extraordinary circumstances.
• An Office of the Public Participation Rapporteur mandated to conduct all public participation on behalf of governmental entities at the national and devolved units.
• A Prime Minister, appointed by the President, from the majority party in Parliament.
• A Department of Happiness, Wellness, and Mental Health in the Ministry of Health.
• Baraza la Washauri: The President should benefit from the private advice of eminent, experienced, and honourable citizens serving as a Council of Advisors on a non-salaried basis.

NHIF: The National Hospital Insurance Fund administrative costs should be cut down to 5%-10%. Currently, this is at about 18%.

Privatization: Expedite the privatization of Government shareholding in assets not delivering value to the public and undertake parastatal reforms.
The findings are further summarized to include “parastatals carrying out County functions should be either wound up or restructured.”

Revenue allocation: Public resources should follow people not land mass. Health, agriculture, and service delivery are also most important than land mass.

Taxation: Have a “flat tax” for every income category above a living wage/income of Kshs 30,000 (~$300) – to reduce tax fraud, encourage compliance, and cut down on corruption in the assessment of taxes.

Tax-cuts:
• Minimize taxation of new and small businesses by giving them a tax holiday of at least seven years as a support to youth entrepreneurship and job creation.
• Cut taxes in relation to Auditor-General audits .. money should remain in Kenyans’ pockets until there is more accountability and governance on its use at the National and County levels
• Also no double taxation and double regulation at the National and County level.

Wealth Declarations: These should be made public and all senior leaders should publish written statements on how they acquired wealth over Kshs 50 million (~$500,000) and have this available on government websites, along with details of shareholdings, partnerships, directorships etc.

(Reward) Whistleblowers: Offer a 5% share of proceeds recovered from anti-corruption prosecutions or actions to the whistleblower whose information is necessary to the success of the asset seizure or successful prosecution.

White-elephants: To stop the abandonment of incomplete projects with each change of administration, the Treasury should not release monies to the new Governor before obtaining a list of incomplete projects and a plan for their completion.

Way forward: In the BBI report, there is no mention about a public referendum, the TJRC report, and very little about land and historical injustices. It also does not address much on legislative issues such as the two-thirds gender rule, and disputes between the Senate and the National Assembly. Parliament breaks for a two-month Christmas holiday this week, during which the BBI debate is sure to be a topic of much discussion up to February 2020 and beyond.

Amazon’s Working Backwards

Earlier this year, I got introduced to a simple business process tool that I find myself using every day, for every task, no matter how mundane. It’s called “Working Backwards” and it is a central feature of innovation at Amazon, the second or third most valuable company in the world 

With “Working Backwards”, you start by listening to the customers before thinking you can innovate. As a manager or a champion of a company, you begin by writing a press release for a product or service. What it will do, and the problem it will solve.  The release is written in the voice of the customer. not the company. 

Then you write the Frequently Asked Questions (FAQ’s), the typical questions a customer or partner will ask, about how a product or service works. 

Then you build a visual of the concept, from the perspective of the customer – a rough drawing showing how the customer will use the product or service. Human beings are very visual and understand things better when they see how it works. 

They do all this before they start designing a product. One fundamental aspect of the process is that the manager or champion becomes an investor in the process. He /she pledges a percentage of their annual bonus to go towards the development cost of the process. There is a gain if it succeeds, and a loss if it does not. This aligns the manager with the process he/she is steering the company towards. In this way, one may not be a CEO with executive options, but with “Working Backwards,” they are a venture capitalist invested in a successful outcome.

The “Working Backwards” process enables a company to invent on behalf of the customer. It has led Amazon to give customers enhanced home shopping experiences with Amazon Prime, deliver a book to a customer within 60 seconds through Amazon Kindle and enable busy workers to quickly shop and walk out of a store without having to queue to pay for items with Amazon Go.

The process allows companies to spot customer problems and opportunities and to better validate innovation concepts. Can we see more examples of “Working Backwards” used? At more companies? How would that change decision-making? Would it mean less loss of corporate resources or product flops because the customer was not considered in the first place? Fewer white elephants? Try it out.