24 April 2018

Rwanda: Nakumatt's Financial Woes Spread to Its Rwanda Operations

Photo: Timothy Kisambira/New Times
One of the two Nakumatt stores in Kigali.

Regional retailer Nakumatt Holdings has been going through financial problems for the past two years, making it difficult for the retail chain to pay pending debts to its creditors.

It has now emerged that Nakumatt Rwanda whose managers have previously claimed that the Kigali chain had been growing stronger despite the struggles of other outlets elsewhere in the region, has also been going through cash flow difficulties for several months. These struggles have crippled operations in Uganda, Tanzania and Kenya.

Following these difficulties, the Rwanda retail store has been put under provisional administration.

The provisional administrator, Gaspard Sebakara Kayiranga, was appointed this month by Nyarugenge Commercial Court, a decision taken following an application filed by Nakumatt Board of Directors.

Kayiranga told Business Times that he took over the company books last week and will be conducting several meetings with stakeholders affected.

"I have just been appointed but I haven't gone through all the documents to grasp the full situation at hand. I was handed over the company books last Friday so I'm yet to know everything," he said, adding that the next process is a restructuring process.

Kayiranga will be overseeing the operations of Nakumatt and the recovery process, and will be reporting to the court directly.

It remains unclear how long the retail outlet will be under an administrator as he did not elaborate how long the process would take.

Adan Ramata, the Country Manager of Nakumatt Rwanda, said that he thinks that it is a positive restructuring process and that they are ready to work hand-in-hand with the administrator.

Ramata said they are waiting to see the proposals of the provisional administrator, expected outcomes, status of the staff at the outlet as well as fate of creditors and the partners.

"So far, we don't see any kind of negative implications. We are looking at a positive restructuring plan," he noted highlighting that they don't expect to lay off staff.

The decision to put the retailer under provisional administration means that all creditors of Nakumatt Rwanda are expected to register their claims with the new administrator.

According to Nyarugenge Commercial Court, Atulkumar Maganlal Shah, a director at Nakumatt, filed the request on behalf of the Board of Directors saying that the business was no longer able to pay its debts.

The information from the Commercial Court indicates that I&M Bank and COPAAC LTD (a coffee producer) filed to the court as Voluntary Intervening Parties.

Last year, it was reported that Nakumatt had closed down its stores in Uganda over tax arrears, with plans to sell its stake in Tanzanian subsidiary.

Nakumatt Rwanda started its operations in 2008, and it currently operates four stores in Kigali. It has about 250 employees.

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