Now suppliers may get relief if a bill for prompt payment is passed by parliament. The bill comes even as suppliers said they were owed a staggering Shs400 billion by the government and the private sector.
The Bill seeks to have all invoices for the supply of goods and services to be settled within 30 days of submission to the government and any questions about an invoice to be raised within the 30 days and communicated to the supplier in writing before the end of the period.
The queries must be resolved within 10 days from the date they are raised and communicated to the supplier.
Prompt Payment Bill
The bill dubbed Prompt Payment Bill is sponsored by the opposition Cord party and opposition leader Raila Odinga said it will go a long way in helping curb graft at the national and county levels.
The Bill also proposes establishment of a Public Invoices Settlement Tribunal to hear appeals from any decisions made by internal appeals mechanisms of every public authority not to pay an invoice.
Odinga said that the Bill is a response to “a real dire situation confronting those who supply goods and services to the government.”
“Many young people who responded to government promises on tenders are dejected because no payment is forthcoming despite frequent presidential orders that they be paid.
“Almost no invoice to government is ever paid without the supplier surrendering a percentage of the invoiced sum to various officers who authorize payment for supplies. Many times, the gravy train runs much higher up the ranks in government offices, reaching Cabinet Secretaries and Principal Secretaries with accountants, clerk and messengers claiming their shares too.”
Shs400 Billion Outstanding
The Bill comes even as suppliers were 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 said unprofessionalism and corruption in government and private sector have partly contributed to accumulation of the arrears.
“It is painful to see many young people around the country struggling to get loans from banks to supply (products and services) to the government with the hope of payment,” he said on Thursday.
“(They wait) months and years before payment is received meanwhile accruing interest on the loans. This act is impoverishing the youth.”
The “Five-step Ordeal”
Investment News has been calling for the traders to come up to protect themselves against unscrupulous big business and the government. (See for example, our story, ‘How to Collect Your Dues When Clients Won’t Pay”).
The banking industry recently introduced the Credit Reference Bureau (CRB) which has added terror to small businesses whose payments are delayed.
Odinga outlined what may be called “five-step ordeal” for the Kenyan business community – taking a loan, supplying goods or services, waiting months or years, accruing interest on the loan and then being forced to part with another amount of money.
“The area of payment of public invoices has the highest prevalence of corruption in Kenya. The Prompt Payment Bill seeks to put an end to this,” he noted.