Learn lessons from Nakumatt Supermarkets collapse
The collapse of retail giant Nakumatt Supermarkets must be taken as part of the learning curve in Kenya’s economy and not just the death of another behemoth.
It must bite the collective conscience of policy makers in both the private sector and government, for not having being proactive enough to arrest the situation when the signs were written on the wall.
They threw under the bus what was once considered East Africa’s Walmart, and with it, sank billions of shillings in investments from suppliers, thousands of jobs and a tattered retail sector value chain.
Without doubt, the retailer which at its peak hired close to 6,000 people directly and many more indirectly, was the epitome of how a retail sector worked. If you wanted it, they had it. They also understood the Kenyan consumer.
But it is the ambitious expansionary drive which came back to haunt the retailer eating into the very core of the sector, as greed led to non-payment of bills amounting to billions of shillings.
Had there been a mechanism to curtail this, we could probably be talking of something different.
Having been one of the major conduits of goods in the economy, the knock-on effect of these pending bills had an apocalyptic effect.
Even small suppliers of milk, tomatoes and honey suffered when the lid was lifted off Nakumatt’s dirty secrets.
Manufacturers raised the issue even as stymied growth called for prompt payment, as a critical tool in business’ performance and operations to ensure cash flowed to make operations smooth within business entities.
From this debacle, the take home is that poorly designed regulation and ineffective implementation of regulation is stifling innovation, growth, job creation and investments in Kenya.
The government must initiate more reforms to strengthen existing legal and institutional framework by fastracking the development and implementation of the public private partnership policy.
It must also move with speed to enact the Trade Development Act to provide an institutional framework for monitoring of the trade sector, and promote formalised business linkages between traders and manufacturers.
The country must also establish a mechanism to monitor trade trends while strengthening trade support institutions.