The Promise and reality: winning ways for retail companies in Kenya through corporate governance
Kitonga, Noel Mwende
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Kenya’s retail sector stands at the second-largest in Africa with 30 per cent formal retail penetration following South Africa’s 60 per cent. As at 2013, the retail sector growth rate was at 8.4 per cent, the highest growth rate ever recorded in Kenya. However, the high growth rate was short-lived as from 2013 to 2017 there was a consistent decrease. Notably, there is a slight increase over the years since 2017, with a 3.9 per cent growth rate recorded in 2019. The retail sector is the 5th largest contributor to Kenya’s gross domestic product with a contribution of about 5.7 per cent as at 2017. With the strong growth rate and major contribution to the GDP, there is no doubt as to why the retail sector is a major area of focus for the Kenya’s Vision 2030 strategy. Unfortunately, a dark cloud of company collapses threatens the retail sector. In corporate governance lies the key to keep corporate failure at bay. This is the promise companies in Kenya have been offered by the extant regulatory framework. However, the reality is a wave of retail company collapses has plagued the Kenyan retail sector. By conceptualizing, problematizing and theorizing retail companies’ practices, the study was able to answer the research questions whether the legal and regulatory compliance framework on corporate governance for retail companies in Kenya is adequate, what is the government’s role in corporate governance and does it influence the collapse of retail companies, what ties bind retail company collapses to regulatory compliance issues as a challenge facing the implementation and practice of corporate governance as drawn from the case studies, and whether there is need for review on corporate governance regulatory compliance by retail companies in Kenya. The study was able to establish that the massive retail company collapses were due to mismanagement exacerbated by the regulatory compliance conundrum facing retail companies. Looking into Uchumi supermarket Plc, Ebrahim supermarket, Ukwala supermarket, Nakumatt Holdings Ltd and Tuskys supermarket there is need for retail companies to establish a proper governance structure as theorized by the stewardship and stakeholder theories, and adherence to the corporate governance principles. The findings of the study have informed the recommendations made herein that call for corporate governance regulatory compliance reforms.