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HP Exit From Kenya Aggravated by Hostile Business Environment and Increased Counterfeit Products

Hewlett Packard (HP) closed its operations in East Africa last week leaving hundreds jobless. The company left a number of its partners without a business citing “internal re-organization” plans.

Reports emerging indicate that the environment had become tougher for HP’s scope of business driving its operations to dormancy. HP is said to have been operating as a shell company for many years and was hit hard by counterfeits and weighed down by the Kenya’s unfriendly tax laws.

The company held its annual GM earlier in September where they resolved to close its business in the region. The notice to wind up was then sent out and published in the local media last week.

Read: Anti-Counterfeit Authority Destroys Products Worth Sh27 Million In Athi River

The particulars indicate that HP was being wound up as a Members’ Voluntary Winding-Up and that George Weru and Muniu Thoiti of P.O. Box 43963 – 00100 Nairobi had been appointed as joint liquidators.

HP battled with the Kenya Revenue Authority, counterfeit companies and competition from Chinese companies manufacturing cheaper products. Toner cartridges were among the most conterfeit products and HP appeared to have won the battle as a couple of arrests were made. However, new counterfeiters came up and it may have become quite difficult to contain the scourge. Ironically, the counterfeit companies will also be affected by HP’s closure given that an original product is needed to come up with a fake.

Court documents revealed that HP was embroiled in a Sh 232 million tax dispute with KRA for the years 2005 to 2011 during which the company supplied its services to Switzerland-based Hewlett Packard Europe BV (HP Europe), its mother company.

Read also: Toshiba Exits Laptop Business, Sells Remaining Shares To Sharp

Mr George Weru, a PricewaterhouseCoopers (PwC) Business Recovery Services Partner, denied that the company was being driven out of the region by debt distress and an unfriendly business environment.

“HP East Africa is a dormant subsidiary of HP and is being liquidated as part of internal re-organisation,” he was quoted by The Standard.

Weru said that HP’s wind up did not involve the court and as such the company did not have any assets to sell off as it was a voluntary winding up by members.

Read also: Demand for Telecommunication Gadgets Surges to Sh 8 billion Due to Pandemic

“Creditors of the company are required on or before October 9, 2020 to send full particulars of all the claims they may have against the company to the undersigned, the joint liquidators, personally or by his advocates, to come in and prove their debts or claims … or in default thereof, they may be excluded from the benefit of any distribution made before such debts are proven,” said the notice.

The statement said the liquidation would not interfere with firms affiliated to Hewlett Packard East Africa.

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Written by Vanessa Murrey

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