Majid Al Futtaim (MAF) Retail has leased 16% of the Two Rivers mall in Nairobi ahead of its completion in October 2015, anchoring the development with a Carrefour – the world’s second-largest retailer after Walmart and an MAF franchise in the MENA and CIS regions.
The Two Rivers mall is a 57,600m2 project set within a larger development between Limuru Road and the Nothern Bypass in Nairobi’s diplomatic blue zone being developed by Centum, East Africa’s largest listed investment company, through its subsidiary Athena Properties.
The deal follows the extension of the franchise agreement between MAF Retail and Carrefour “to include 38 countries in the Middle East, Central Asia, Africa and Russia,” according to the Dubai firm, which has plans for 66 hypermarkets and 72 other stores.
James Mworia, CEO of Centum, meanwhile noted that, “the vision of Centum in developing Two Rivers was to create a commercial destination on a par with other global destinations, so it is with great pride that we sign MAF Retail–Carrefour today as the anchor tenant.”
MAF Retail – Carrefour added that the Kenyan outlet would create at least 400 direct jobs, while the firm’s strategy of using local suppliers would create a further 400 indirect jobs.
The Carrefour hypermarket will one of the largest in East Africa, competing with the likes of Nakumatt, Uchumi, and Tuskys, while the Two Rivers mall will be the largest in Sub-Saharan Africa with outside of South Africa, boasting a further 120 outlets within its premises.
Carrefour is also expanding into West Africa, led by an initial project led by francophone distributor CFAO in Abidjan, which should be operational by 2015, alongside plans in Nigeria.
The MAF deal is also the second major investment by the Al Futtaim family in Kenya this year, following Al Futtaim Group’s majority acquisition of east African motor dealer CMC Holdings.
Once fully developed, the entire Two Rivers development will comprise 850,000m2 of mixed-use space, including the mall, office towers, a hotel, luxury apartments and infrastructure.
“There is huge demand. What is lacking today in Kenya and Africa generally is quality places for people to do business,” said Mworia, echoing the sentiment of the World Bank’s ease of doing business index, where Kenya languishes at 136th out of 189 countries.
Major changes are underway, however, and Kenya launched the world’s largest geothermal power plant in October, which promises to halve the country’s energy costs by early 2015, and President Kenyatta further declared it his personal mission to raise production to 5,000MW within 36 months.
As energy instability continues to play a major role in impacting the competitiveness of so many African businesses, it is hard to overestimate the importance of such developments.
Earlier this year, IMF boss Christine Lagarde also praised the development of major road and rail infrastructure in Kenya, including the Lamu Port South Sudan Ethiopia (LAPSSET) corridor, as a potential magnet for foreign investment, economic diversification and employment.
Lagarde also noted Kenya’s “valuable lessons to the rest of the world on how to empower the poor through financial access,” citing 2013’s positive FinAccess Survey, which revealed that about 75% of Kenya now has access to formal financial sector service providers.