Uchumi comeback is a lesson in business

Retail chain outlet Uchumi Supermarkets returns to the Nairobi Stock Exchange (NSE) on Tuesday after a five-year hiatus.

The company’s stock was suspended from the NSE in 2006 after a slipshod expansion plan, chalking up massive losses estimated at Sh1.2 billion.

Uchumi’s comeback has been steady and gradual, rising out of insolvency last year — the very first signal that the re-listing was imminent.

To the shareholders, however, it has been a long wait, the retail outlet having gone under with an estimated Sh2.6 billion held by 19,000 shareholders.

Its eventual admission to the NSE therefore comes as relief to shareholders who faced the potential erosion of their worth in stocks.

And even as investors await the bell at the NSE, it should suffice to draw lessons from the retail outlet’s current shape.

First is the role of management in business success. Taking over as receiver manager, Jonathan Ciano was adept at negotiating with suppliers, banks and Government as he was at cutting costs.

From suppliers and bankers, Ciano was able to secure fresh repayment schedules, which allowed the supermarket adequate room to stay afloat.

But perhaps what is more critical is remembering what got an otherwise successful business into a financial hole. Uchumi’s collapse was largely attributed to poor management, as has been the case with many other State corporations.

This is something that should not be allowed to recur.