Nakumatt Rwanda, a subsidiary of one of the leading retail chain stores in the East African region, has reassured customers it is not facing any financial crisis as claimed in the media.

While dismissing the reports, Adan Ramada, the Nakumatt country manager, revealed that the chain store will instead open two more outlets, in Kagugu and Remera, early next year.

"We can assure our Rwandan market and the region as well that we are not facing any crisis like it was earlier reported in different media outlets,” Ramada told Business Times over the weekend. Currently, the chain operates two stores in the country, both in Kigali.

Ramada added that they are in the market to compete and create opportunities for all, noting that the firm is facing no challenges currently.

However, last week, Nakumatt Holdings, the holding company that owns the supermarket chains in Kenya, Uganda, Tanzania and Rwanda, admitted in a statement that it was facing economic challenges

"Like any other business operating in this market, Nakumatt Holdings has faced a number of unforeseen business challenges. These challenges range from a depressed economy, higher operating costs and extraneous factors, including risk management due to prevailing security threats, among others,” the company said in the statement signed by managing director Atul Shah.

However, Shah said despite an interruption in cash flows emanating from instabilities in forex exchange, the multi-million dollar entity is still sound and running well.

We are currently doing well and expect to pick-up further during the festival season, he noted, adding that the business entity is currently positioning itself to maximise the Christmas and New Year’s holidays.

The current situation has brought about a stalemate with suppliers who have opted to keep their products off the shelves, especially in Uganda; "and as a result we have been actively engaging our current suppliers to review the current supply terms.”

However, in Rwanda, the country manager said the retail store has good working-relationships with suppliers.

Positive receipts

The local subsidiary said that it has recorded good gross revenue since November 2009 prompting the expansion plans

"We will continue to work with our suppliers on issues of capacity and packaging for the sustainability of business, Ramada said.

Early this year, the Common Market for East and Southern African States (COMESA) Business Council agreed to facilitate local companies and hotels through local sourcing for partnerships project to boost consumption of locally produced commodities.

Nakumatt Holdings Rwanda is one of the companies that agreed to support the project by offering suppliers best practices, especially on food safety and quality management processes.

Furthermore, the company said it was restructuring the business at management level. There are also new terms being introduced for the suppliers. This has delayed supplies getting back on the shelves, the firm said.

Creating more employment opportunities

Meanwhile Nakumatt Rwanda also announced the planned expansion will bring to the market more than 100 new job opportunities in addition to the 250 local employees of the firm.

Nakumatt had initially laid out plans for a highly ambitious $20 million real estate project. Known as the Gateway Mall, the development of the property in Kigali was going to be undertaken in partnership with Virunga Property Development, a local real estate firm.

Rather than participate in developing a single huge mall the Rwanda subsidiary will instead concentrate on building two more smaller stores, according to officials.The competition in the supermarket retail business is growing following the entrance of new international and regional brands. Other players include Simba Supermarket and Sawa Citi.

Refinancing options

Meanwhile, the parent company said it was engaging financiers to provide bridge financing options for the company to stay afloat. "We are conscious that such financial restructuring remains a key imperative, thus our focus on long-term solutions, which are aligned to the overall business strategy.

"With the ongoing financial re-engineering engagements focus on accessing significant capital injection, we are confident that overall debt will further reduce once the process is concluded in the coming days,” according to the statement.

Uchumi suspends entry

Last year, Uchumi Supermarkets, which is cross-listed on the Rwanda Stock Market, suspended its plans to open shop in Rwanda for at least another year. According to its earlier expansionary plans, Uchumi was supposed to open its first store at Chic Complex, located at former ETO Muhima, in Kigali. Another store was to be opened in Musanze, Northern Province.