Suppliers are pushing for a 30-day credit period for deliveries in the new trade policy being developed by the Ministry of Industry and Trade in a bid to regulate the retail and wholesale sector.
About Sh400 billion is owed to the suppliers in delayed and disputed payments by the government and private sector, the retailers' lobby estimates.
The Association of Kenya Suppliers chairman Kimani Rugendo says unprofessionalism and corruption in government and private sector have partly contributed to accumulation of the arrears.
“We are owed a lot but you need to put your (retailers) house in order,” Rugendo said.
The Kenya Association of Manufacturers chief executive Phyllis Wakiaga said delayed payments are crippling the sector, disrupting supply chains due to cash flow challenges.
The manufacturers' lobby chief said there is need to develop codes of conduct for the players in the retail and wholesale trade to enhance accountability, fair trade practices and reasonable payment terms to support growth within the industry.
“Changing the culture of late payment will benefit the whole economy, (while) increased cash flow will cause business growth, enhance competitiveness and also maintain and increase employment opportunities and efficiency through the supply chains,” she said during a workshop by the state department of trade last week.
“We want a situation where suppliers can be paid within 30 days. This cash flow is important for continuity, business growth and development.”
Trade PS Chris Kiptoo during the same event said the government is finalising the national trade policy which will address challenges facing the country’s business community.
“This is the moment for us to fix trade. I will do all within my powers to fix trade,” Kiptoo said.
Among recommendations made by KAM to address delayed payments include fast-tracking and finalising the policy and legal frameworks “within which the wholesale and retail sector will operate to provide the much needed direction”.
The lobby also wants a National Advisory Committee on prompt payment to be formed.
“We propose that the task force’s mandate focuses on identifying valid concerns within the wholesale and retail sector on late payments, formulate proposals based on the Buy Kenya Build Kenya to promote local content sourcing in the sector,” Wakiaga said.
The task force will also develop proposals on the structures for wholesale and retail to guide the sector reforms envisaged in the draft National Trade Policy.
In May this year, the Kenya Private Sector Alliance presented a memorandum on late settlements to President Uhuru Kenyatta, asking the government to pay interest for delayed payments for delivery of goods and services.
Kepsa said levying interest on late payments would cushion suppliers against the high cost of funds, especially where the capital is borrowed from commercial banks.