Govt supplier task force to push for prompt payment

The government has formed a supplier’s task force as it seeks to create a cordial working relationship between suppliers and retailers.

This comes as the Association of Kenyan Suppliers claims in excess of Sh400 billion in payments is either outstanding or held up in disputes.

This has negatively affected the manufacturing sector which is now facing cash flow constraints.

According to trade Principal Secretary Dr Chris Kiptoo, the taskforce will promote harmonious relations between suppliers, retailers and manufacturers.

The task force will be charged with drafting proposals on the structures for wholesale and retail to guide the sector reforms.

At the same time the government is finalizing the national trade policy, a piece of legislation expected to address challenges faced by traders.

Through the legislation, suppliers will undertake to be paid within 30 days after delivery to suppliers to improve business cash flow.

“These are the regulations we need to implement as a country to ensure fair trade practice and deal with late payment issues,” Kenya Association of Manufacturers (KAM) Chairperson Flora Mutahi said last week during an industry consultative meeting.

One of example of the glaring payment delays is Uchumi Supermarkets’ outstanding debt to suppliers.

Uchumi owes its suppliers an estimated Sh3.6 billion with a section of suppliers at one point threatening to liquidate the country’s oldest supermarket chain to recover its debt.

Uchumi Chief Executive Officer Julius Kipng’etich worked out a deal with the suppliers even forming a suppliers’ council that would ensure money are held in an escrow account to ensure timely payments.

Manufactures are also pushing for government to pay interest in delayed payments after the state emerged as one of the delayers.