9 Companies Put Under Management as Economy Struggles

The business environment in Kenya is not as rosy as we are made to believe. If anything, the collapse of several companies including sugar millers, retailers like Nakumatt and others being placed under administration is a clear indication that there is something wrong in the country’s business environment.

Many companies over the past few decades have gone bankrupt, closed, or phased out completely by competition. The sitting government has been blamed for gradually suffocating the environment, and it is no surprise that people should link the two. With the wave of corruption that has swept across the country, it is hard to ignore the fact the country has succumbed to poor conditions of doing business.

The country has been rocked by massive scandals that have taken a toll on the economy. The economic cost of corruption has stretched even to the most remote areas of the country. Funds meant for developments, the youth, and the elderly are continuously being misappropriated.

These cases of theft projects irredeemable long-term opportunity costs alongside jeopardizing the country’s strategic objectives. Corruption has compromised the future of citizens and their development. In retrospect, we can all agree that corruption will drain any economy of the resources required for projects like infrastructure and investments.

High costs of production brought about by tax imposition even in areas where the government would have eased the burden is another factor that is driving companies to liquidation. Coupled with unfavorable energy costs, the manufacturing sector is having it hard in terms of increasing and ensuring better output.

Well, the tale of trouble is not new either, and the country’s economy alongside cartels and unscrupulous business individuals are to blame. When a firm takes a loan and fails to pay when state corporations are mismanaged and creditors are frustrated, when all the indications are there that a company is failing and no one helps, who is to blame?

The economy is rapidly plunging to its death and the trend of companies closing continues. Let’s not begin talking about small and medium enterprises (SMEs), which barely gets a conducive environment for operating.

The government is hellbent on increasing public debt forgetting that by implementing policies that favor businesses across the country is what the economy needs right now. The government is partly to blame for the increasing number of companies going under receivership or placed under administration.

Very few companies that have gone under receivership have failed to revive their operations. Meanwhile, those that are suffering the most are the middle-class people and the those depending largely on the collapsing companies for income. With the government sitting idly by, the unemployment rate continues, the cost of living increases, and the common citizen is starving. Amid all these, statistics carry on lying to us that the ease of doing business in the country has improved.

Directors, managers, and stakeholders in several strategic companies are making it even worse. They leverage their positions for individual gains giving little thought to the implication of their actions to the employees and the company.

Here are examples of companies that have gone under receivership in the country following loss-making, corruption cases, mismanagement, and political interference. While most of them have tried to revive their operations, some closed shop and weren’t heard of again.

Kisumu Cotton Mills (Kicomi)

It all started with Kicomi, the cotton mills firm that was placed under receivership back in the early 1990s. the company’s collapse came shortly after the World Bank and International Monetary Fund (IMF) prescribed new structural adjustments, which got rid of price controls. This led to unregulated liberalization of the cotton sub-sector and competition.

The company, hence, went under receivership under the liquidator PriceWaterhouseCoopers (PwC) who later on sold it to an Asian entrepreneur for an undisclosed amount. It took more than two decades for the government to think it a good idea to revive the cotton mills.

Meanwhile, thousands of people lost their jobs and were left hopeless with no source of income. To others, business prospects in the cotton industry died.

Kicomi isn’t the only company to be placed under receivership with PwC. Others include: