June 27th 2017

Business / News

Govt, industry study urges Kenyans to pay debts

"We welcome the idea of the government stepping in as a regulator; it will be a win-win situation for all of us. The challenge for suppliers has been in trying to understand why there are cash flow issues, whereas goods in the supermarket are bought in cash", he said.

By Nyambura Muthoninmuthoni@kenyafreepress.comThursday, 23 Mar 2017 18:06 EAT

KAM Chair Flora Mutahi and PS Trade Chris Kiptoo.

The government has received the report of a public-private task force that studied the problems associated with late payments in Kenya. The principal secretary for Trade, Dr Chris Kiptoo, received the 'Prompt Payment report' that was commissioned by Kenya Association of Manufacturers (KAM)  in partnership with Suppliers Association of Kenya and Retail Trade Association of Kenya(Retrak).

The report is an overview of the retail sector aimed at highlighting current challenges and proposing measures to address them. Speaking at the reception of the report, Dr Kiptoo reiterated the government's determination to have all stakeholders involved in the sector on a level playing field.

He said, "The findings in this report will assist us to develop efficient ways to ensure fair play in the market to erase or eradicate any tendencies towards unhealthy dominance. This sector was left unregulated for a while, and we want to ensure that there is a code of practice all players can adhere to."

Manufacturers and suppliers had previously raised concerns about the delay in payments by retailers. They claimed that about Sh40 billion was still unpaid to them, and they were seeking assistance to handle the crisis. KAM chairperson Flora Mutahi said SMEs were the most affected by the delayed payments.

"Manufacturers contribute 20 percent to the GDP. Our cash flows have been threatened and it has limited our innovations. For many manufactures the question is, why should I manufacture when I am not getting paid," said Ms Mutahi.

The Suppliers Association of Kenya represented by their CEO Ishmael Bett, emphasized the need to have a strong regulator to enforce prompt payment within the retail sector. "We welcome the idea of the government stepping in as a regulator; it will be a win-win situation for all of us. The challenge for suppliers has been in trying to understand why there are cash flow issues, whereas goods in the supermarket are bought in cash", he said.

The Ministry of Industry, Trade and Cooperatives has promised to apply International Best Practice to the development of the code to guide the sector and constitute a tribunal to handle disputes within the sector. The task force will further select a board to ensure that the code is adhered to. The report will be presented to the Cabinet Secretary for further consultation and approval. 

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