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"id": 247363,
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"speaker_name": "Dr. Kituyi",
"speaker_title": "The Minister for Trade and Industry",
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"legal_name": "Mukhisa Kituyi",
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"content": " Thank you very much, Mr. Speaker, Sir. At inception, Uchumi Supermarkets Ltd. was 51.5 per cent owned by the Government through 24.9 per cent shareholding by Industrial and Commercial Development Corporation Investment (ICDCI), Kenya Wine Agencies Ltd. (KWAL) 18.8 per cent and ICDC, 7.8 per cent. Mr. Speaker, Sir, Uchumi Supermarkets Ltd. was the largest locally-owned supermarket chain in the country, at one time operating 28 branches distributed across the land. It provided an outlet to Kenya's small-scale farmers, manufacturers and created direct employment for more than 1,000 Kenyans. The company had grown to be seen as a symbol of Kenyan local enterprise. 1280 PARLIAMENTARY DEBATES June 13, 2006 Mr. Speaker, Sir, Uchumi Supermarkets Ltd. became a public company in 1992 when it was listed at the Nairobi Stock Exchange. However, the Government continued to maintain its majority shareholding until October last year when the rights issue to the public led to the reduction of Government shareholding to the level of 9.03 per cent, ICDC 2.78 per cent and KWAL 6.25 per cent. What led to the collapse of Uchumi? The collapse of Uchumi has been a culmination of many years characterised by managerial weaknesses, unsound investment decisions, including tying resources into non-core business, and over-accumulation of dead stock, all of which denied the company resources needed for its operations. While these problems could be seen on a later period, they were particularly acute during the period between the years 2000 and 2004. The expansion programme undertaken by the board and management in that period resulted into additional fixed assets in buildings, chillers and other equipment, and increased working capital, mainly additional inventory. Indeed, a Committee of this House was given details earlier on, of how Uchumi, around the year 2002, purchased Christmas cards that could not be completed in more than 10 years. Unfortunately, sales did not match the enormous increase in operational expenses created by the five-year expansion programme. The economic downturn in the country at the turn of this millennium and rising competition from other retailing outfits, piled pressure on this company. In addition, the expansion programme without appropriate investment in human resources put pressure on the management capacity which escalated the challenges facing the company. Consequently, from the year 2002, the company has been experiencing serious cash flow difficulties, which particularly worsened starting in 2003. Although the Government has a minority shareholding in Uchumi, my Ministry considers its public responsibility to the producers and consumers of Uchumi services to be greater than a mere assessment of our shareholding. Indeed, I believe that Uchumi is a brand name that encodes certain patriotic history of this country which we all desire to nurture. I have in the past sought to find the best possible method to deal with the problems of its liquidity, short of handing it over to a foreign company. While I was away in Washington, I was accused of resisting an attempt to sell Uchumi to a South African company. I plead guilty. I have always thought, short of all other options, Uchumi should remain a Kenyan enterprise to the best of our ability. We sought to find what method would best be used to satisfy this."
}