Traders who unjustifiably hold suppliers payments risk a Sh 10 million penalty or a five year jail term, according to a new retail code of conduct.
Termination of a commercial agreement without notice, refusal to accept or return goods in breach of contractual terms will also expose traders to a similar penalty.
The code, signed yesterday, is meant to rein in businesses that abuse their influence over suppliers. The code will be enforced through the newly created Competition Authority’s Buyer Power Department.
The authority’s director-general Wang’ombe Kariuki said they will investigate any abuse of amendments to the Competition Act 2010.
Trade PS Chris Kiptoo said a legal framework is being developed to support efforts to streamline the retail sector, minimise incidents such as the closing down of businesses and losses that could otherwise be avoided.
“This code of practice will encourage self-regulation and harmonise the retailers’ and suppliers’ ways of engagement and also apply international best practices applicable to Kenyan businesses,” he said yesterday.
Economic Survey 2018 shows the informal sector represents 83.1 per cent of the country’s total labour force of approximately 13.3 million Kenyans, and a big chunk are employed in retail sector.
Retail trade largely comprises of micro, small and medium enterprises retailing goods and services that are sold to final consumers either in supermarkets, kiosks or other outlets.
Retail Trade Association of Kenya chairman Willy Kimani said government should encourage more local entrepreneurs to join the sector, which grew by three per cent last year.
He said despite the entrance of international retail giants, there is still room for home grown businesses to thrive.
Several retail outlets have faced closure over the past two years as cash flow problems hit, while debt that piled upwards of Sh40 billion saw giant chains such as Nakumatt and Uchumi scale down on their activities, in the process passing losses to suppliers in unpaid billions.