• Public institutions will be required to pay suppliers within the period agreed in the contract or else accounting officers will be jailed for five years or fined Sh5 million.
• Under the new proposed law, finance officers responsible for the processing of payments shall give priority to the payment of any outstanding debts.
Image: PATRICK VIDIJA
Public institutions will be required to pay suppliers within the period agreed in the contract or else accounting officers will be jailed for five years or fined Sh5 million.
Delayed payments shall also attract interest that shall accrue monthly until the total amount is settled if a new Senate Bill is passed.
The Prompt Payment Bill, 2020 sponsored by senators Johnson Sakaja (Nairobi) and Farhiya Haji (nominated) is set for introduction in the Senate today for First Reading.
The proposed law seeks to put in place a legal framework to fast-track payment for supply of goods, works and services procured by government entities both at the national and county levels.
The Bill seeks to cure the pain that suppliers currently endure as a result of delayed payments.
“A procuring entity who fails to pay a supplier by the prescribed payment date shall unless otherwise agreed to, pay interest to the supplier in accordance with this section on the amount due under the contract for the supply of goods, works, or services,” the Bill reads.
It stipulates that the interest shall be based on the base rate set and published by the Central Bank of Kenya and shall accrue every month until the entire amount is cleared.
“An interest shall not be waived by the supplier, and shall be included with the amount due for the supply of goods, works or services without demand for its payment being made by the supplier,” it states.
In instances where there is no written contract or the contract does not spell out payment period, the accountants or responsible officers shall process and make payments within 90 days of the receipt of the invoice or completion of the works.
The Bill further states that finance bosses who fail to adhere to the payment period for whatever reason and have not agreed otherwise with their suppliers shall have committed an offence punishable under the Bill.
“Where a supplier has delivered an invoice to the procuring entity and the responsible officer of the entity negligently or maliciously fails to return the invoice or pay the amount due by the prescribed payment date, commits an offence and shall be liable to a fine not exceeding Sh5 million or to imprisonment for a term not exceeding five years or to both,” it states.
Suppliers and contractors for both county and national government agencies have been suffering because of delayed payments dating back five years ago. President Uhuru Kenyatta has been issuing orders to the institutions to make the payments.
According to figures released by the National Treasury, some Sh26.9 billion outstanding debt was payable as at January 2020. Another Sh80.9 billion was undergoing verification to ascertain authenticity.
However, this is not the first Bill being fronted. In 2016, Gatundu South MP Moses Kuria proposed amendment to the Public Procurement and Disposal Act to enable government suppliers paid within 30 days.
ODM leader Raila Odinga also made similar proposals but they just remained that - proposals.
Under the new proposed law, finance officers responsible for the processing of payments shall give priority to the payment of any outstanding debts.
“In determining which debts shall be given priority under subsection (1), a procuring entity shall have regard to the dates upon which payment fell due and shall pay debts in chronological order,” it reads.
Edited by Henry Makori