The doctor is in: I will get Uchumi out of the ICU

Julius Kipng’etich, the chief executive of cash-strapped Uchumi Supermarkets is a man under-siege. Or so they say. The man himself does not think so. And he is not just putting on a brave face. He means what he says.

Julius Kipng’etich CEO Uchumi Supermarkets

What he is going through at Uchumi is déjà vu to him. He has been through it all before. “I thrive at the edge. That place where people look down and get scared,” he said as though he was standing at the top of a precarious precipice. Weekend Business had visited the former CEO of Kenya Wildlife Service (KWS) for an interview at Uchumi’s headquarters at the heart of Nairobi’s Industrial Area. “I have dealt with much difficult situations before,” he said of his decision to join the struggling retailer.

Before he joined Uchumi, Kipng’etich had a hustle-free job as the second in command to James Mwangi, the CEO of Equity Bank. He was the chief operating officer (COO). To dump such a fast-growing corporation for a retail store on the edge of oblivion was akin to jumping into a sinking ship. People thought he was crazy. He was not. After talking to Kipng’etich for some time, you cannot help but visualise him in crisp white overalls, a stethoscope around his neck and a pager in hand. Currently, that is exactly what he is, a doctor of a patient called Uchumi.

He is right at home. After all, his area of interest is managing change, an equivalent of a doctor whose specialty is dealing with patients with terminal illnesses; those closer to death than life.

Stop the hemorrhage

However, Kipng’etich says his patient is out of coma. “Uchumi has left the woods, it only needs to get into the general ward,” he says. The first time Kipng’etich entered into Uchumi’s ward, he found the patient in utterly bad shape. The patient was bleeding profusely. At the time, the retail chain was losing close to Sh200 million annually. The retail store was in “distress,” he says. And this was caused by “severe bad governance” and “very weak internal controls.”

His first course of action was to stop the bleeding. He admits and insists that the procedure, he used was “painful.” He fired over 1,000 employees, closed the retail chain’s branches in Uganda and Tanzania, and some seven branches in Kenya. This was all done to stop the hemorrhage. “The employees that were laid off are not happy. We do not like doing that. But, it is either all of us remain and sink or a few get sacrificed for the sake of the company to stay afloat,” he says.

His decisions have since earned him foes. He is used to being called names on the social media, he says. There is still a lot of mop-up of the past to be done, he says. Nonetheless, it has not been a smooth-sail. He has had to stay up late consulting. “I am being sent emails at 3am,” he says noting that the anguish has started paying dividends. He has also had to beg a lot. He has pleaded with shareholders to allow for the entry of strategic investors and for suppliers to buy a stake into the Nairobi Securities Exchange-listed supermarket.

His efforts, he says, has seen the company reduce its annual loss from Sh200 million to just Sh50 million. Suppliers have agreed to convert half of their Sh3.6 billion debt into equity, and the process of getting a Sh1.2 billion loan from government to settle part of the remaining old debt is well on course. By Thursday last week, 106 suppliers had agreed to resume supplying. Sixty-eight had already supplied by end of business. Behind his oak-paneled desk in his office is a wall-to-wall book-shelf. Besides the books, the shelf also contains a photo of himself in a game warden’s regalia from the days when he was the boss at KWS and a photo of a child, presumably his son.

Being a former management lecturer at the University of Nairobi, you would assume most of the books are on management. He fishes out one of the books which he says his late mentor, director of Starehe Boys’ Centre Dr Geoffrey Griffin, was fond of. The book, “Life -after-Life,” written by psychiatrist Raymond Moody, records the experiences of people who have gone through near-death experiences.

Uchumi, he says, is a case of near death experience. But so was KWS and Investment Promotion Council, which was renamed Kenya Investment Authority (KenInvest) and the Student Welfare Authority at the University of Nairobi. “I have a lot of knowledge in dealing with institutions in distress,” he says. “But I am not a mortician,” he adds with a chuckle.

In his memoirs, Do it My Way! Fighting to Do the Right Thing: A Transformational Story, the CEO who is also a husband and father remembers his time at KWS, especially initially when he joined the institution as a greenhorn on matters conservation. “On my appointment, the media put it cleverly the challenge that lay ahead; in the local dailies, there was a picture of me in a lion’s mouth ready to be chewed a way!” he writes.

Such was the mockery that he was subjected to 12 years later. At the start of this year, when Uchumi held its Annual General Meeting (AGM), one of the shareholders could not help but wonder, rather bluntly, how a person who was used to managing animals could turn-around an ailing retail chain. “The State of KWS as I took over was enough to put off the bravest of hearts. Neither my background, management knowledge, experience and strength in management science nor my business acumen had prepared me enough for this kind of organisation I found, an institution in total disarray,” he writes in the memoir.

In a way, the disease that almost drove KWS to an early grave was the same one that is tormenting Uchumi. And by extension, it is the same disease that plagues most corporations in the country and our society in general. In the memoir, Kipng’etich attributes “very low revenues” at KWS to “high levels of fraud and corruption.”

Don’t be like them

At some point in our interview, Kipng’etich seems to slip back to the days when he was a lecturer, only this time his lecture is to the CEOs. He says: “Many people, especially CEOs, under-estimate the value of a company. A single decision that you make as a CEO has huge implications,” he says noting that in the case of Uchumi it affects suppliers, landlords, shareholders and employees.

One such decision was made by his predecessor. At some point, the former boss appointed himself supplier to Uchumi. In a bid to deflect any fallout, he extended this privilege to other managers. “We are still trying to uproot that rot to date, but it is difficult,” he says.

His antidote to such problems is integrity. In the memoir, Kipng’etich pays homage to Griffin, who “taught him that the premium of life is integrity.” Kipng’etich got his secondary education at Starehe.

As he lay on his Nairobi hospital in June 2005, Dr Griffin left Kipng’etich with words that have inspired him to date. The old man said: “My dear boys...Our world is full of people who do their duty half-heartedly, grudgingly and poorly. Don’t be like them.” Right now, Kipng’etich says he’s giving his all to Kenya’s oldest retail store.