Uchumi Supermarkets in 2013 became the third company to cross-list its shares on the Rwanda Stock Exchange (RSE) after Nation Media Group (NMG) and KCB Group, both of which are Kenyan companies.

Uchumi, once a giant retail chain with supermarkets across Kenya, Uganda, and Tanzania, became troubled over the years due to declining sales and rising amounts of debt that limited its ability to continue operating effectively.

The Kenyan retail store had set plans to open three stores in Rwanda in 2015 as part of its regional expansion strategy, only to shut those plans due to financial and management troubles.

The same year, two years after cross-listing on the Rwandan bourse, the firm closed its subsidiaries in Uganda and Tanzania and folded operations due to piling debts, executive misconduct, and merchandise theft – issues that had rocked the company for many years.

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In March 2020 the company signed a Company Voluntary Agreement (CVA) with 121 suppliers of goods and services it owed money. The agreement would enable the firm to restructure its debts and recapitalize the business.

Since then, there has been little update about how this process has happened, and the troubles the company faces have deepened. Even with that, Uchumi still trades on the Nairobi Securities Exchange (NSE) and is cross-listed on the Rwanda Stock Exchange.

"If a company doesn’t have assets, then it doesn’t make sense that it would trade on the stock market,” Kevin Karobia, Senior Investment Analyst at BK Capital told The New Times.

Uchumi traded 2600 shares on NSE on Thursday, March 28. Despite such little movements, there has barely been any movement on its stock on the Rwanda Stock Exchange.

"There is no demand for Uchumi shares. I don’t have any investor who holds the stock, and there is no trading activity at all,” Olivier Muneza, chief executive officer at Mo Capital, a brokerage firm based in Kigali, told The New Times.

‘Stop trading Uchumi’

Although Uchumi’s counter on RSE is still open for trading, its stock has not seen any activity since October 2019. Analysts say it does not make sense to continue trading its stock.

"From a business perspective, it is not viable as they are no longer operational, resulting in investors not benefiting from any dividends,” Bob Karina, CEO of Faida Securities, said.

Karina, who’s also the Founder and Chairman of Faida Investment Bank, told this paper that the stock’s underperformance and stagnant price is not attractive to investors.

"Thus, there are few investors who trade due to low capital gains,” he noted.

Although Uchumi is still cross-listed on RSE, the company is not compliant with listing regulations as relates to the filing of the audited accounts, board composition and holding of annual general meetings.

The company has not issued any financial statement, it has not held board meetings consistently, and there is little known work about their operations, which questions its transparency despite operating only one retail store in Kenya.

"It is not in the best interest of anyone to trade its shares,” Karobia said, adding that one of the paramount advantages of trading shares of a publicly listed company is that there is a lot of transparency and accountability.

"There is no transparency in Uchumi’s case and no one knows about their corporate governance. You cannot make any sound investment decision in absence of this,” he said.

Uchumi was suspended from trading on the Uganda Securities Exchange (USE) in July 2021 due to failure to comply with listing obligations.

"Uchumi failed to comply with listing obligations prescribed under the USE Fees, Charges and Penalties Rules of 2021 and the USE Listing Rules of 2021 respectively,” USE said at the time.

This year, the Capital Markets Authority of Kenya said it was setting up a recovery board for troubled companies listed on NSE including Uchumi in a move aimed at protecting investor interests and reviving confidence in the stock market.

The move would see troubled firms such as Uchumi Supermarkets, TransCentury, Kenya Airways, and Mumias Sugar Company transferred to the special board for two years to help them get back on stronger footing.

Failure to recover within that period would eventually lead to delisting of such companies from the exchange.

The New Times understands that Rwandan regulators – RSE and Capital Market Authority – have been monitoring Uchumi’s restructuring process in Kenya and consulting with regulators in Nairobi.

However, efforts to get more details about this monitoring process and whether Rwanda Capital Market and RSE plan to suspend Uchumi were futile.

Hope for recovery?

Despite efforts to save Uchumi, there are little signs that point to optimism that the financially troubled company will eventually get back to its feet.

This month, Mazars Consulting, the firm supervising the retailer’s company voluntary agreement plan, said the firm has been quiet on the franchising strategy that was agreed years back.

Under CVA, a company makes a proposal to its creditors to offset debts and picks a supervisor of the plan.

Mazars said in the supervisory report on Uchumi that while progress has been made including settling about 82 per cent of the old debts, no much activity has been seen on either the franchising model or convincing the government to rope the retailer in its plans.

"There is however a concern that the new business model of franchising and engaging the government for inclusion on its economic transformation agenda appears to have been relegated if not dropped by the management altogether,” Mazars report indicated.