What Was Chris Kirubi’s Role In The Collapse Of Uchumi?

Mr Chris Kirubi, embattled former Chairman of the board of the collapsed Uchumi Supermarket chain



Who is Chris Kirubi? What sort of a person is he? (This is a significant question because character is essential for anybody running a public institution, let alone the chairman of the board). How did he make his current fortune? What was his role in the collapse of Uchumi?

I have deliberately put these questions together because they are related.

It is amazing what short memories Kenyans have. I will not make any claims or wild allegations but will instead present a few facts.

Chris Kirubi did not inherit his fortune. During the coffee boom 1975/1976 when many Kenyans made millions smuggling coffee from chaotic Uganda at a time when Brazilian coffee had been heavily hit by frost thus pushing world coffee prices to an all time high, Chris Kirubi was a mere employee of a parastatal transport company known as Kenatco.

Without making any wild allegations, before the coffee boom Mr Kirubu was a penniless ordinary employee of Kenatco. After the coffee boom, he emerged an extremely wealthy man. He used his connections and friendships made during the coffee boom to clean up and enhance his image. Foreign companies coming into Kenya looking to appoint a director with their ear to the ground and good reliable powerful contacts had turned to Chris Kirubi in increasing numbers and in no time at all he was "Mr Clean". Meanwhile this shrewd unschooled man picked up all he could from the many boardroom appearances he made, the rest as they say is history and today he is one of the wealthiest and most powerful men in the land. But now it seems that his past is rapidly catching up with him.

The key question to ask here, is what were Mr Kirubi's priorities and loyalties when he was appointed chairman of the board at Uchumi? Were they to further enhance the well-being of this public company or was it to consolidate his own personal interests?

The government should instigate a full enquiry into the circumstances that led to the collapse of Uchumi and we will see to who's door step most of the blame leads. This is serious matter because Uchumi was not somebody’s family business.

This blogger's policy is never to make wild unsubstantiated claims that cannot be proved and in the instances when I cannot resist the temptation of doing so, I label them as such. However the truth is that whilst we may laugh and look down on small retails traders and dukawallas, the truth is that there is no corporate sector that calls for more specialist knowledge than the retail business (an MBA only, is the worst possible qualification for a supermarket CEO to have - just ask Nakumatt). Reading the biography of Sam Walton and Walmart will make this truth come out very clearly for anybody. Inspite of Sam Walton’s vision and genius, the great American supermarket chain was in deep debt for many years.

My bet is that it will be found that Uchumi Spermarkets was thrown to the wolves, that is a group of people struggling to be the ones to gain the most personally from this national asset and non of them had the faintest idea of what the business was all about.

This blogger hereby joins the growing list of Kenyans asking that the government step in and halt the collapse of Uchumi.

My suggestion is that the man who understands this company more than any other Kenyan I know, Suresh Shah be re-appointed managing director and that the government gives the supermarket chain a soft loan to get things going again, even as a full public enquiry is instituted.

(Read next post to see how Uchumi was run in its' golden hey days.)

The Untold Uchumi Supermarkets Story

As Uchumi Supermarkets Came Crushing Down Recently, I Couldn't Help Remembering The Smiling Son Of A Dukawalla, The Genius Who Built Up The Supermarket Chain. There Are Many Lessons To Be Learnt Here

I was recently asked by this naïve young girl who has recently completed high school how a business like Uchumi can actually collapse. To her, Uchumi going down was akin to the Central Banking collapsing, it just doesn’t happen.

I then realized that many Kenyans are thinking just the way my young friend was.

My mind went back to my friend Suresh Shah son of a dukawala and born in Mariakani (near Mombasa) who is a chemical engineer by training but was Uchumi’s most successful managing director.

Suresh got his degree from a world famous technical university but couldn’t find a job in Nairobi in the mid 70s, so when an opening with ICDC as a management trainee came up, he grabbed it and never looked back. He cut his teeth doing a painful restructuring at ART (African Retail Traders) that saw him shut down a number of outlets. Then fate landed the then troubled Uchumi Supermarkets in his hands. His instructions were actually to shut it down in an orderly manner.

The supermarket had been launched in Kenya with the help of Italians and was therefore packed with Italian products that nobody wanted. To discover this, Suresh sat in the supermarkets daily for about 30 days (from opening to shut down time) to study the trade. (A fascinating lesson for MDs who want to fully understand their business).

The only thing Shah ended up shutting down in his amazing turnaround achievement at Uchumi were a full Butcher unit in the Industrial area which was bleeding badly. That helped focus the business on the retail trade. He also fired a few employees who were rampant thieves.

Maybe one day Shah’s remarkable feat will be recognized more widely because when he took over Uchumi as MD it was technically bankrupt already. He kept it going by working out a simple and yet elaborate system of turning over cash as many times as possible before having to finally pay a supplier. It involved persuading suppliers to take payments after 45 days and then he used the cash generated from their supplies to make as much additional profits as possible before payment became due.

At the height of Uchumi’s glory, the supermarket chain was a heavy investor in short term treasury bills.

Then there’s the story of the Ngong Road branch of Uchumi. Initially it is said that Suresh almost had a seizure when he was given a quote of what a structure was going to cost on the then vacant lot that the chain had just acquired after Shah noted the heavy affluent traffic on Ngong Road and saw it as an opportunity Uchumi could use. So what did he decide to do? He opted to build a warehouse supported by steel structures on the four corners. Unfortunately the guy hired to excavate the ground did not believe the instructions to dig so close and went ahead and dug according to their own specifications. Shah found a way to use the extra depth and the underground car park was born.

Everybody complained about the ugly ceiling of a warehouse not being appropriate for Uchumi’s stature. They were wrong, shoppers don’t spend their time staring at the roof in a supermarket and anyway the extra high roof without a ceiling saved a fortune in possible air-conditioning facilities. In the end the building cost only a small fraction of what it would have actually cost had conventional thinking been used. That was the genius of Shah. No doubt this stuff was in his bones having been the son of a dukawalla (Asian small trader)

It is now clear that those who took over from Shah despised what they perceived to be his penny-pinching ways. The result is the catastrophe we now have in our hands where over 1,000 families are in serious trouble as their bread winners lose a regular source of income.

Maybe you should find a way to come back Suresh, and help sort out this mess.