5 Kenyan family business empires that crumbled and lessons learnt

– Once giant retailer, Tuskys, lost its tusks two decades

after the death of founder Joram Kamau

– Nakumatt on the other hand was liquidated in January

2020 after experiencing financial woes attributed to huge

debts and mismanagement

– Nine years after his death, Njenga Karume's empire is in

ruins with his children and trustees fighting to control his estate

In Kenya, family businesses are big and are a source of

employment for over 60% of the population.

Tuskys staff at a past meeting before the retail chain

collapsed. Photo: Tuskys Supermarket.

According to data by the Family Business Institute, however,

only one-third of family-owned businesses last into a second

generation of ownership, 12% to a third and just 3% to a

fourth.

Another report by multinational professional services firm,

PwC , released in May 2021, revealed family-owned businesses

in Kenya lack clear succession plans.

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to Cover for Their Unpaid Dues

The report dubbed the East Africa Family Business Survey

noted that troubles arise after the death of founders, with

public feuds between relatives being the order of the day.

“Within these businesses themselves, there are generally

high levels of trust and communication. Yet very few of

them have properly considered and documented

governance and succession frameworks for their family

and business,” Sunny Vikram, an associate director at

PwC Kenya, said.

 looked into Kenyan family business empires that

crumbled and possible reasons behind their much publicised

collapse.

1. Tuskys

Once giant retailer, Tuskys, lost its tusks two decades after

the death of founder Joram Kamau.

At its peak, the Kenyan supermarket chain was one of the

largest in the Great Lakes Area. It employed over 6,000 people

in Kenya and 150 in Uganda .

In 2016, Tusky's supermarket CEO Dan Githua was ejected

from his office unceremoniously by the heirs to Tusky's

empire.

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The grandchildren reportedly stormed his office and ordered

him to leave the premises. He was recalled two months later.

Some of the reasons that contributed to the collapse of the

multi-billion supermarket which had several branches in major

towns include sibling rivalry, internal fraud, aggressive debt-

fuelled expansion and fierce competition.

By August 2020, it had accumulated debt worth KSh 6.2 billion

owed to suppliers and creditors.

Despite entering a KSh 2 billion agreement with a Mauritius

firm to ward off financial constraints, the closure of its last

branch in Nakuru proved to be the last nail on its coffin.

2. Nakumatt

The Nakumatt supermarket chain was founded by the Atul

Shah family.

As of December 2015, it was one of the most profitable

supermarkets in Kenya with gross annual revenue in excess of

KSh 48.5 billion.

At that time, Nakumatt had 65 stores in the African Great

Lakes countries of Kenya, Uganda, Rwanda and Tanzania with

over 5,500 employees.

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Nakumatt began experiencing serious cash-flow issues in

2016. It was unable to meet its financial obligations to

landlords, suppliers, and staff.

An administrator was appointed to help it re-gain financial

footing.

However, in December 2019 the retail chain sold the last six

branches to Naivas Supermarkets in a deal that saw its brand

disappear.

In June 2018, a damning audit report revealed KSh 18 billion

disappeared under ex-boss Atul Shah's watch.

A dossier presented to the creditors by Peter Kahi, the

company's court-appointed administrator, lifted the lid on

blatant theft, pilferage and a number of other serious

fraudulent activities that left the once East Africa's biggest

retailer broke and in massive debts.

The creditors in the case included DTB, which was reportedly

owed KSh 3.6 billion, Kenya Commercial Bank (KCB) owed

KSh 1.7 billion and StanChart KSh 805 million.

The retailer also owed Bank of Africa KSh 328.4 million,

United Bank of Africa KSh 126.2 million and GT Bank KSh

104.8 million.

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during a 3-Week Visit to the Coast

Creditors formally voted to liquidate the company on January

7, 2020.

3. Njenga Karume's empire in ruins

The late James Njenga Karume was a Kenyan businessman

and politician with vast interests in hospitality, logistics and

agriculture.

The former Cabinet minister died on February 24, 2012, at

Karen Hospital, Nairobi, leaving behind property worth billions

of shillings.

Nine years after his death, his empire is in ruins with his

children and trustees fighting to control his estate.

4. The Akamba Bus collapse

Sherali Hassanali Nathoo established the Akamba Bus

Company from humble beginnings in Machakos county.

The Akamba Bus was once the dominant player in the

transport industry with a network spanning over 50

destinations.

The founder, Nathoo, passed away in September 2000, leaving

a company he successfully built from scratch to his wife

Zarina and sons, Moez and Karim.

Nathoo's sons took control of the company after his death but

were unable to replicate their dad's success.

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Board room wrangles, family disputes, escalating fuel prices

and recession led to its death in 2012.

5. Spencon

Spencon was a huge construction company founded in 1979

by Jitendra Patel.

In the 1980s and 1990s, it had operations in Kenya, Tanzania

and Uganda, India, and Zambia, Malawi, Mozambique, and

Southern Sudan with a strong 5,000 workforce.

In 2009, Emerging Capital Partners (ECP) invested KSh 1.5

billion into the company and used it to take 37.4% of the

company.

The construction company ran into financial woes five years

after ECP bought the shares forcing it to appoint Andrew Ross

to help turn around its fortunes, BBC reported.

However, Ross failed in his mission and in 2016, it collapsed

leaving hundreds jobless and distraught.

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