This archive report was first published on 7 July 2020.
Kenya's retail landscape has witnessed the rise and fall of several supermarket chains, with Tuskys being the latest to face a liquidity crisis. In 2017, Tuskys was poised to save fellow supermarket Nakumatt from collapse by pledging Sh3 billion in debt guarantees and Sh650 million in short-term capital. However, the deal ultimately fell through, and Nakumatt went under, leaving behind a debt of Sh38 billion owed to creditors.
According to court-appointed administrator Peter Kahi, Nakumatt's demise could have been averted if the retailer had received the promised funds from Tuskys. The retailer had recorded Sh4.1 billion in cash inflows at the time of its liquidation, but Tuskys only loaned Nakumatt a paltry Sh50 million, which was just 1.2% of the total inflows.
It's worth noting that Tuskys had previously breached anti-trust laws in 2014, when it was fined Sh5.3 million for engaging in anti-competitive practices with Ukwala supermarkets. The retailer had entered into an agreement in 2013 to acquire three branches of Ukwala Supermarkets.
Fast forward to the present, Tuskys is facing its own liquidity crisis, with signs of distress beginning to show. The retailer has closed four branches, including Digo Road (Mombasa), Kitale Mega, Tom Mboya (Nairobi), and Mtwapa Chap Chap, resulting in the loss of at least 80 jobs. Customers are also complaining of empty shelves, and the supermarket's aggressive expansion has come to an end.
While Tuskys has attributed its woes to the global Covid-19 pandemic, investigations by the Competition Authority of Kenya (CAK) have revealed that no retailer had presented documents showing their inability to pay was caused by the pandemic. CAK had requested 25 major retailers across the country to submit their debt portfolios outstanding for over 90 days, and only four were found to have delayed payments for more than 90 days.
A Tuskys insider, who spoke to the Financial Standard anonymously, alleged that the retailer's problems were caused by pilferage, with top managers having
