The government of Kenya is closely watching the Tuskys supermarket situation as it slowly goes into a financial crisis after failing to pay its suppliers.
According to Trade Cabinet Secretary Betty Miana, the retail shop is now on the ministry’s watch list because it failed to meet its contractual obligation with suppliers.
“The ministry has received the report and has been engaging with both the retailer and the suppliers and monitoring the situation closely. This matter was brought to our attention in April. It is something that we are monitoring and engaging closely with Tuskys. Nobody wants to see businesses go under. The measures which have been put in place by both parties are being monitored by the ministry and reviewed on a weekly basis,” CS Betty Maina told The EastAfrican publication.
According to Ms. Maina, early intervention in the retailer’s precarious situation will prevent the collapse of the supermarket, which operates over 63 branches in Kenya and Uganda and employs about 6000 workers. Ms. Maina acknowledged that government intervention was not enough but also required the participation and co-operation of both parties.
Back in 2018, Nakummatt collapsed and entered into a voluntary administration to protect itself from creditors it owed over $300 million. In January 2020, creditors to the once giant retailer voted to liquidate it, a move that drove the final nail in its coffin.
Uchumi supermarkets is another regional retailer which is ailing after failing to pay off creditors, among them banks, workers and suppliers
The Kenya Association of Manufacturers (KAM) said Tuskys is facing debt payment challenges and is flouting the joint Prompt Payment Code of Practice that indicates that payment of Fast Moving Consumer Goods should be done within 30 days from the date of the invoice while other items that are not within the category should be paid within 45 days.
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Although the agreement was signed by the Retail Traders Association of Kenya, KAM, and Association of Kenya Suppliers, Tuskys wants the payment of the supplied goods to be done after five months. The request has however been denied by the manufactures urging that it will erode their cash flow positions and destabilize their operations
“Tuskys proposal to manufacturers is for payments to be made over 150 days for goods supplied as early as December 2019.
A sustainable solution would be to ensure that there is a mandatory provision to ensure timely payments of supplies and repercussions in an event that the provisions are not honored. Such include interests on delayed payments and financial guarantees for goods taken on credit,” the manufactures said.
By April this year, Tuskys had closed three branches in Nairobi, Kitale, and Mombasa saying it was temporary and the move meant to help it serve customers better in spacious outlets by adhering to the government’s directives of social distancing, and personal hygiene to curb the spread of coronavirus.
