CLEAR DEBTS

State should help SMEs by paying them on time

In Summary

• Government owes Sh250 billion to small and medium companies

• We need a mind shift in government

A bundle of money. FILE
A bundle of money. FILE
Image: FILE

Government is strangling SMEs by not clearing outstanding debts of Sh250 billion, according to Kenya National Chamber of Commerce chair Kiprono Kittony.

The World Bank recently downgraded its forecast for economic growth for Kenya from over six per cent to just about five per cent. One key reason is that the private sector is hobbled by government failing to clear its debts. The bitter truth is that many SMEs are going out of business because they are not paid by government.

The KNCCI is proposing legislation to pay interest on late government payments equal to prevailing bank rates; forcing governors to honour debt incurred by their predecessors; a mechanism to offset amounts owed by government against tax liabilities; and waiver of tax penalties for companies owed large amounts by government.

 
 

These proposals are sensible and worthwhile but they do not deal with the root problem of delayed payments by government.

We need a mind shift in government. Yes, we need better roads, and therefore Chinese loans, but not to the extent that it kills off Kenyans' SMEs. Let government now strike a better balance between developing infrastructure and paying off its domestic debt.


Quote of the day: "Whatever obstacle comes your way, you gotta be prepared to jump over it."

Akon
The Senegalese-American singer was born on April 16, 1973