This archive report was first published on 19 August 2020.
Government entities in Kenya have been criticized for delaying payments to suppliers, resulting in low liquidity in the market and mass layoffs. A proposed bill aims to address this issue by requiring national and county governments to offer payment guarantees upon awarding tenders.
According to the Public Procurement and Asset Disposal Amendment Bill of 2020, payment guarantees will allow suppliers and contractors to collect their payments from the bank within 90 days in case the government fails to settle payments on time.
“The national and county government shall make payments to the successful tenderer by way of a bank guarantee. The bank guarantee shall take effect after ninety days,” reads the bill.
The Kenya Association of Manufacturers has expressed support for the bill, citing the negative impact of delayed payments on businesses. The association notes that low liquidity in the market has resulted in mass layoffs and poor performance of businesses.
Legislator Patrick Wainana, the sponsor of the bill, has urged the public to give their comments to enrich the bill, which has already gone through the first reading.
Other key amendments proposed in the bill include limiting the price of contracts to within 15% of engineer estimates and requiring international firms to source at least 4% of their materials from local suppliers to qualify for a government tender.
