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10 companies in Kenya that announced shutdowns in 2023

Pulse Picks features some businesses that announced plans to shut down

10 companies in Kenya that announced shutdowns in 2023

Procter & Gamble (P&G) is set to exit Nairobi by June 2024 due to the high cost of doing business, currency shortages, and declining sales.

Approximately 30 direct workers and contractors will be affected.

P&G, known for brands like Pampers and Gillette, plans to shift to a distributor importation model, eliminating local ground support.

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The move follows cost-cutting measures in recent years, reducing 30-40 roles. The decision is attributed to challenges in extracting value from emerging markets, influenced by American policies, high-interest rates, and a strong dollar.

Jumia, the e-commerce platform operating in seven African markets, including Kenya, announced the closure of its food delivery business in December due to unfavourable conditions.

The decision came after a strategic review, with the company citing the business' unsuitability for the current operating environment and macroeconomic conditions.

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Jumia mentioned that the food delivery segment accounted for 11 per cent of its gross merchandise value (GMV) but has never been profitable.

The move is seen as a strategic shift towards profitability, focusing on the physical goods business.

British pharmaceutical multinational GlaxoSmithKline (GSK) is set to exit Kenya, following a trend of global firms scaling down operations in the country due to a challenging business environment.

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GSK, which has operated in Kenya for nearly 60 years, will now rely on distributors to supply its products to regional markets.

The decision is attributed to low sales and a strategic focus shift towards more profitable prescription drugs and vaccines.

Despite closing operations, GSK plans to maintain its manufacturing facility in Nairobi's Industrial Area under its independent consumer healthcare subsidiary, Haleon.

GSK clarified that the manufacturing facility in Kenya is a Haleon facility and not part of the operational update for GSK in the country.

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The exit from Kenya follows the closure of GSK's operations in Nigeria, both being significant markets in Africa.

The company plans to adopt a distributor-led model to continue supplying its products in these markets, adapting to the changing business environment while maintaining its African presence.

East End Junior Academy has announced its permanent closure in December 2023 due to the challenging economic environment in the country.

The school director, Gachango Munyambu, confirmed the authenticity of the memo circulated to parents.

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The memo explained that the tough business environment has put pressure on the directors, who are both over 70 years old.

They have decided to retire, leading to the closure of the school from 2024.

The school, founded in 1993, expressed gratitude for the support received and assured parents of continued assistance.

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Base Titanium, an Australian mining company, announced its decision to cease mining activities in Kwale, Kenya, by the end of 2024.

The company, which has been a significant contributor to Kenya's mining industry, has been unable to find new mineral resources to extend its operations.

This decision will have a substantial impact on the local economy, leading to job losses and affecting the government's revenue.

As a result of Base Titanium's departure, the government is looking to reform the mining sector to attract new investors and offset the losses.

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Additionally, the government is considering alternative sectors such as forestry to diversify the economy and mitigate the impact of the mining industry's decline.

Africa Oil, a Canadian-owned oil and gas exploration firm, has exited the Turkana oil project in Kenya after settling a tax dispute and other rows by paying a total of Sh2.17 billion ($15.5 million) between April and June 2023.

This payment was to settle historical tax and partner disputes, with Sh1.163 billion paid as an out-of-court tax settlement with the Kenya Revenue Authority (KRA).

The company had been embroiled in a tax dispute with the KRA, which was cleared by the High Court to collect $18.7 million as unpaid value-added tax (VAT) for 2011, 2012, and 2015.

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Africa Oil appealed the ruling but later sought an out-of-court settlement, paying the KRA Sh1.163 billion as the principal amount assessed. The firm then disclosed that it was in talks with the National Treasury for a waiver or reduction of the interest and penalties.

The exit from the Turkana oil project followed the relinquishing of its 25 per cent shareholding to Tullow Oil, leaving ownership of the South Lokichar oil wells to Tullow Oil. The company's decision to exit the project was to concentrate on regions with high petroleum potential

B2B e-commerce startup Zumi is shutting down due to its inability to raise the funding necessary to sustain its operations.

The company will lay off its team of 150 people, and its CEO, William McCarren, stated that the current macro environment has made fundraising extremely difficult, leading to the company's inability to achieve sustainability in time to survive.

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Zumi, which began as a women-focused digital magazine in 2016, later pivoted to e-commerce but faced challenges with low digital advertisement revenue, leading to its initial shutdown.

After re-emerging in 2020 as a B2B e-commerce company, Zumi gained traction, received funding, and achieved over $20 million in sales and acquired 5,000 customers before its shutdown.

Sendy, a Kenyan logistics startup, is shutting down its operations and exploring a sale of its assets.

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The company ran out of funds and had been cutting costs to remain afloat. It had announced a 10% workforce cut last July and had further reduced its workforce in subsequent cost-cutting measures.

The startup had been struggling to raise additional capital and is now attempting to sell some of its assets, including tech and fulfilment operations, to other African companies in the B2B e-commerce and trucking space.

Over 200 employees are set to be affected by the closure. Sendy was co-founded in 2015 and has raised $26.5 million in disclosed funding from several investors, including Toyota Tsusho, Atlantica Ventures, and VestedWorld.

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The world-renowned security printing firm De La Rue plc decided to suspend its operations in Kenya, marking the end of its 25-year presence in the country.

The company, which has been responsible for printing a significant portion of the world's banknotes, cited reduced demand for banknotes as a key factor in this move.

The winding down of its Kenyan operations came in the wake of a £2.7 million expenditure to lay off staff, pay legal fees, and write off assets.

Additionally, the firm has been grappling with a significant decline in revenue from its Kenya operations, with a 45% decrease reported.

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The company's joint venture with the government remains active, and it is open to exploring future business opportunities in Kenya, provided the economic climate is conducive.

The closure of De La Rue's operations in Kenya is a reflection of the evolving landscape of currency and the increasing prevalence of digital transactions on a global scale.

Kenyan B2B e-commerce company MarketForce has shut down operations in three of its five markets in Africa and is in the early stages of launching a social commerce spinout called Chpter.

The company's super-app, RejaReja, which enables informal retailers to order fast-moving consumer goods (FMCGs) directly from distributors and manufacturers and access financing, will only be available in Uganda after discontinuing the offering in Kenya, Nigeria, Rwanda, and Tanzania.

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However, Kenya will continue to serve as the company's headquarters and a launchpad for Chpter.

MarketForce's decision to scale down its operations began last year when some venture capitalists reneged on their Series A funding commitments, forcing the company to reduce operations and conduct multiple rounds of layoffs

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