LIQUIDITY

Billions in pending bills hurting businesses–KAM

Ministries, state departments and agencies are grappling with over Sh178 billion in pending bills.

In Summary

•Manufacturers have also blamed duplication of regulations and unfriendly implementation of tax measures for hampering the sector' growth.

•Head of Civil Service Joseph Kinyua says the government has committed to complete payment of pending bills by November 30.

Manufacturers have decried low liquidity in the market in the wake of massive lay-offs by companies, amid a tough business environment which has led to poor performance by businesses.

The Kenya Association of Manufacturers (KAM) has said companies and businesses are suffering from lack of cash, mainly on delayed payment of government’s pending bills, which runs into billions of shillings.

“The biggest thing we are talking about right now is liquidity. There seems to be less money in the economy because government is owing suppliers money which is not being released as required,” KAM chief executive officer Phyllis Wakiaga told the star in an interview.

Ministries, state departments and agencies are grappling with over Sh178 billion in pending bills, despite President Uhuru Kenyatta’s June 1 directive that bills that did not have audit queries be settled by end of the same month.

According to KAM, investors and businesses are also suffering from delayed VAT tax refunds, as suppliers continue to operate on negative accounts.

Both the national and county government owe suppliers whom a huge number took loans to deliver goods and services to the two.

Ass at June, counties owed suppliers in excess of Sh100 billion.

“Counties are also not doing their due diligence when it comes to paying manufacturers and suppliers. we also have concerns over refunds on VAT. The government is holding money which is reducing liquidity in the market, “ Wakiaga said.

KAM's sentiments comes amid a new presidential directive that pending bills be settled in full by end of this month .

Last week, Head of Civil Service Joseph Kinyua directed all government departments to furnish his office with reports on the settlement of the bills, which have proven to be an uphill task for the government.

 
 

“Please note that the government has made a commitment to complete these payments by November 30,” Kinyua said in a memo dated November 19.

Kenya Revenue Authority has since committed to clear pending 6,000 VAT refunds worth Sh27.6 billion by April next year.

KAM, which represents manufacturers across the country, has also blamed duplication of regulations and “unfriendly” implementation of directives including tax measures , for slowing down growth in industries and the supply chain.

“We have seen a lot of regulations over reach and duplication where regulators are not coming on a compliant support angle. They are coming from a sledge hammer -shut you down- kind of approach, which for business is not positive,” Wakiaga noted.

“Businesses want to comply but the approach of coming with a sledge hammer without compliance support is not very positive,” she added.

The association is however hopeful that a recent assurance by Interior CS Fred Matiang’i, on government’s commitment to address regulatory issues, will bear fruits.

Last week, Matiang’i said the government is aware of “areas where pending bills have strangled some businesses,” which he said will be addressed.

 “CS Matiang'i has assured us that they have a conversation with regulators and they have a regulators' conference coming up in December where they will be looking at how do we create a better regulatory environment that is more predictable , stable and facilitates business growth where we reduce duplication in regulatory bodies," Wakiaga noted.

Elsewhere, KAM has called on its members to ensure they remain competitive in the wake of increased cheaper imports, mainly from china.

“We must ask ourselves what is the China price. you might not get the China price today but you can start that path and say that is my target. As KAM, our policy and advocacy is to deal with those areas that can remove unnecessary costs and unblock barriers,” KAM Vice Chairman Mucai Kunyiha said, during a stakeholders forum in Nairobi last Thursday.

Meanwhile, the President’s Delivery Unit's delivery expert Polycarp Onyango has said the government is committed to support businesses with main focus on SMEs.

“The president is more than serious to ensure that SMEs are back on their feet,” Onyango said.