In September 2012, Dr. Julius Kipng’etich surprised Kenya’s corporate world after he resigned as the director of the Kenya Wildlife Services (KWS) in order to join Equity Bank as its Chief Operating Officer. Since his appointment as the director of KWS in 2004, Dr. Kipng’etich had become synonymous with everything good about KWS.
At the time of his appointment, KWS was seen as a corrupt parastatal that grievously suffered from political interferences and poor management structures charged at merely taking care of Kenya’s wild animals. Within a span of eight years, Dr. Kipng’etich was able to engineer a massive turnaround that made KWS the beacon of process and good management. For instance, he turned the institution’s value from less than Sh. 1 billion to Sh. 5 billion, and in the process, bagged awards such as the CEO of the Year courtesy of the Company of the Year Awards.
Since moving to Equity Bank, Dr. Kipng’etich’ star somewhat dimmed. He ceased from the major platforms he was known from to work in the executive arms of the bank. In his appointment, Dr. Kipng’etich was charged with helping Equity Bank in its bid to becoming a pan-African entity. “As the bank continues to grow in size and footprint, we will continuously seek outstanding talent that will contribute in implementing the Bank’s Pan African expansion strategy,” said Equity Bank CEO Dr. James Mwangi, following the appointment. Interestingly, he had been serving in the bank’s board of directors prior to his appointment.
Three years later, on Tuesday, Dr. Kipng’etich took another bold corporate step when he became the CEO of troubled Uchumi Supermarkets. Since news on his appointment were released, various opinions have been tabled on why Dr. Kipng’etich may have quit his lucrative senior position at Equity Bank to steer what many perceive to be a sinking ship. On one hand, there is the opinion that despite being a corporate leader in his own right worth of walking in the CEO’s shoes, Dr. Kipng’etich had to contend with staying under the shadow of Dr. Mwangi, the CEO and face of Equity Bank.
It will be noted that after his entry into Equity Bank, Dr. Kipng’etich was seen as being groomed to head Equity Bank. On the other hand, there are those who have seen his move from flourishing Equity Bank to staggering Uchumi as a bold step from a man who is accustomed to turning around the fortunes of ailing corporates. Indeed, this fete could very well be what informed the decision to appoint him as Uchumi CEO, especially considering how he maneuvered KWS’s turnaround from less than a billion to a 5 billion entity.
Nonetheless, the question has remained on whether Dr. Kipng’etich has bitten more than he can chew.
Now, let us take a look at Uchumi. Over the past few years, Uchumi Supermarkets has been hitting the headlines for all the long reasons, including huge debts, inability to pay suppliers, empty shelves, shutting branches, misinformed expansion drives and net losses.
In June this year, it was revealed that Uchumi Supermarkets had used property valuations to inflate profits and, or cover losses it made in the past two years. In 2013, Uchumi ought to have reported a loss of Sh. 123 million against the Sh. 357 million while in 2014, it ought to have reported a loss of Sh. 336 million against the Sh. 413 million it reported.
Currently, the firm is engaging the services of a HR firm Hipora Business Solutions in a bid to probe theft by employees. The retailer has 39 braches in East Africa and an workforce of about 4,500 employees. However, it has been lacking in strategic position of itself, and has been overwhelmed by other local supermarkets such as Tuskys, Nakumatt and Naivas in booking of strategic spaces.
In the same vein, the retailer owes suppliers funds amounting to around Sh. 1 billion, and has now turned to borrowing from banks and selling some of its assets to offset its pile of debts.
Last year, Uchumi Supermarkets took a Sh. 405 million loan from Co-operative Bank to pay suppliers, and another Sh. 600 million loan from KCB to fund expansion. It also floated a rights issue which failed intially before garnering Sh. 896 million. In July this year, the retailer took an additional Sh. 500 million loan from KCB
Notably, Dr. Kipng’etich will be succeeding the previous turnaround CEO Jonathan Ciano, who brought Uchumi from statutory management. Mr. Ciano was sacked for what the retailer termed as gross misconduct and gross negligence. It remains to be seen how Dr. Kipng’etich will engineer Uchumi’s turnaround at a time when the retailer is running as a wounded donkey in a horse’s race.
It also remains to be seen how Dr. Kipng’etich will protract his role to protect his corporate record.The question his performance as Uchumi CEO must answer is: was he right in moving from Equity Bank to lead Uchumi?
