Auctions expose Kenya’s soft underbelly – experts
Auctioneers are having a field day in Kenya as businesses and individuals struggle to meet their financial obligation promoting recovery by creditors.
This follows the state of economy which has not only pushed businesses off the cliff but also led to joblosses, and now it seems that Kenya is yet to shrug-off the the Covid-19 shocks, despite the economy having fully opened.
Between the months of June and July, the local newspapers have been filled with hundreds of homes and commercial properties set for auction valued in the hundreds of millions.
However, for some, dwindling fortunes may have started earlier as the recent case of collapsed retail Tuskys reveals. Auctioneers are selling its prime property at the Nairobi Central Business district which was put up for sale for the second time this year.
Tuskys auction
Equity Bank, which is seeking to recover a loan of Sh650 million, put on notice the supermarket’s five-storey building in Nairobi’s city centre but there seems to be little appetite in the market due to a depressed economy.
“The sale of the properties is subject to the reserve prices. The auctioneer has a right to reject a bid without giving any reason whatsoever,” said the auctioneer in a public notice.
The move signals the retailer’s financial distress and could trigger multiple creditors to seize and forcibly sell its assets.
Kenya Revenue Authority (KRA) auctioned 193 cars at the port of Mombasa, alongside other items after the expiry of a notice was issued in May, after owners failed to pay taxes and other requisite duties.
“Goods will be auctioned pursuant to provisions of section 42 of the East African Community Customs Management Act, notice is given that unless the undermentioned goods are entered and removed from the custody of the Customs Warehouse Keeper, Kilindini, within 30 days of this notice,” read a gazette notice dated May 20, 2022.
In the insurance sector the court granted Mama Rael Memorial Foundation the nod to auction Africa Merchant Assurance Company (Amaco), making it the latest insurer in recent months to come into trouble after Resolution which collapsed with Sh6.6 billion in client’s cash.
Green Hills Hotel
Amaco had been given a seven-day ultimatum to clear a Sh19 million debt or face regulatory action.
Despite the Ministry of Tourism pointing to a possible recovery in the sector, the situation on the ground paints a different picture as Green Hills Hotel in Nyeri has been taken over by Agah Khan and is in the process of being converted into a hospital.
The woes in the hospitality sector have further been exacerbated by the eventual auctioning of the iconic White Rhino Hotel after a 30-day order issued by the court to mobilise funds for offsetting a loan owed to KCB Bank elapsed.
John Kirimi, an investment analyst at Sterling Investment says the poor state of the global economy and the weakening of the shilling exposed the government and its inability to sustain itself by exposing businesses to harsh operating environment. “Kenya borrowed more than it can sustain this therefore means that in any eventuality it is unable to offer subsidies to cushion citizens and businesses,” said Kirimi.
