Skip to main content
A general view shows the entrance to the Nakumatt supermarket within the Village market complex mall, in Nairobi, Kenya, November 7, 2017. Picture taken November 7, 2017. To match Insight KENYA-RETAIL/ REUTERS/Thomas Mukoya - RC11DD4A0C60
Africa in focus

Africa in the news: Nakumatt’s bankruptcy woes, Senegal’s new airport, and Cameroon’s growing crisis

East African supermarket giant Nakumatt’s bankruptcy paves the way for new players

The managers of Nakumatt, Kenya’s largest supermarket chain, filed for administration under insolvency laws at Kenya’s high court in late October. The retail giant’s 60 outlets throughout East Africa source products from 1,500 suppliers, employ 6,720 direct workers, and once generated turnover roughly 1 percent of Kenya’s gross domestic product, according to Reuters. Now it owes approximately $300 million to creditors.

Author

Managing Director Atul Shah blamed the business’ downfall on its ambitious 2010 expansion, which incorrectly based its revenue projections on a Kenyan economy annual growth rate of 10 percent or more, increasing the demand for Nakumatt products and boosting revenues. In recent years, Nakumatt struggled to manage its credit facilities with suppliers as it grew at a prodigious rate—from 36 stores in 2011 to 62 in 2016. Moreover, the chain experienced more setbacks as its flagship Nairobi store was destroyed during the September 2013 terrorist attack on the Westgate Mall. Theft of cash and stock was also rampant among Nakumatt stores, reaching 10-15 percent of goods and stock, which is far above the 2-3 percent global average of theft in stores.

In its October petition to the court, Nakumatt managers proposed appointing an administrator to restructure the business and requested a moratorium on the liquidation of its assets or evictions by landlords. However, the court dismissed the petition in mid-November, arguing that the retailer did not provide sufficient evidence to suggest that the business could recover from its current crisis. This week, Nakumatt suffered another blow, as a planned merger between another supermarket chain, Tuskys, and Nakumatt was rejected by the Competition Authority of Kenya (CAK). The plan would have given Tuskys control over Nakumatt’s operations while Tuskys would provide a loan and debt guarantee to Nakumatt to bring its cash flow problems under control.

Meanwhile, other players are moving into the region in an attempt to win the retail market, valued at an estimated $12.4 billion in Kenya by market-research firm Euromonitor International values. The wider region’s growing middle classes and rising consumer spending are attracting retailers from across the continent and world—such as France’s Carrefour, South Africa’s Game, and Botswana’s Choppies—to compete for market access. Africa’s largest retailer, the South Africa-based Shoprite, is reportedly looking to fill spaces that Nakumatt will vacate and is in talks with property owners to do so, Quartz reports.

Senegal’s newly inaugurated airport raises high hopes for the country’s economy

On Thursday, Senegal inaugurated its new $575 million international airport in Diass, bolstering the country’s attempts to become a travel hub for West Africa. The path to the airport’s opening has been turbulent, though. Named after the first African elected to the French parliament, the Airport International Blaise Diagne, saw 10 years of delays as the country faced challenges in landing financing. In particular, funding promises made in 2007 vanished as the 2008 economic crisis took off. The creation of the new airport came with the resettlement of 3,000 families who lived on the original site, with whom striking a settlement deal became a lengthy process.

Senegalese authorities estimate that the airport will see 3 million passengers during its first year, with hopes that these figures will grow to 5 million and 10 million in 2023 and 2035, respectively. They also expect that relocation of the airport from Dakar to Diass, 26 miles east of Dakar, will decongest the capital city. In addition, authorities hope that new airport will serve as an engine of development for Diass, as jobs in transport, catering, cleaning, and retail, among others, will be created.

Senegalese authorities are also planning to create a plethora of complementary developments such as shopping malls, hotels, and restaurants in the area. The airport’s location is relatively close to Senegal’s beach resorts, an advantage of the country’s tourism sector. The terminal plan of the project includes the construction of a $1 billion rail project linking the airport to Dakar.

In other airport news, Zimbabwe’s new government signed the first post-Mugabe loan agreement, which will be used to refurbish and expand the Robert Gabriel Mugabe International Airport in Harare. The $153 million loan from China carries 2 percent interest over 20 years with a seven-year grace period. When presenting the project, Finance Minister Patrick Chinamasa stated that the country was “back in business to build the capacity to honor our obligations not only to China but also to our international creditors.” In building the new airport, officials hope to create demand for investors and tourists. Part of the loan will also go toward the construction of a new parliament. Though signed on Wednesday, the deal negotiations started in 2013.

Cameroon deploys troops to anglophone regions amid growing separatist movement

This week, the crisis in Anglophone Cameroon reached new levels as the government deployed troops to the region in order to combat the growing separatist movement there. On December 1, the government had announced a forced evacuation of 16 villages in southwest Cameroon, stating that anyone remaining “will be treated as accomplices or perpetrators of ongoing criminal occurrences.” President Paul Biya and Defense Minister Joseph Beti Assomo have labeled them “criminals” and “terrorists.”

The separatist movement has gained steam during an escalation of peaceful protests by teachers and lawyers and an internet shutdown by the government in Anglophone Cameroon. In fact, most schools in the northwest and southwest of the country have remain closed since November of 2016. This ethno-linguistic tension stems from perceived discrimination of the minority anglophone Cameroonians: They are unable to hold civil service jobs, many government documents are only published in French, and French-speaking and French civil law-trained lawyers are placed in British common law courts in the region.

According to Reuters, over the past month, insurgents—whose goal is to form the Republic of Ambazonia have killed at least 11 soldiers and police, and the ensuing government response has caused over 5,000 English-speaking Cameroonians to seek refuge in neighboring Nigeria since October 1. Residents of the affected regions have accused the government of human rights abuses such as murder and rape.

More

Get daily updates from Brookings