This archive report was first published on 19 December 2019.
Kenya's economy has been plagued by the issue of late payments to suppliers, with the collapse of Nakumatt Supermarkets being a prime example. The supermarket chain owed suppliers a whopping Sh18.5 billion before it went under.
President Uhuru Kenyatta recently assented to the 2019 Competition Amendment Bill, which aims to control 'buyer power' in the market. However, some experts argue that this law may not be the solution to the problem of late payments.
According to Jaidhi Kisero, a renowned economist, the new law may be an ill-conceived piece of legislation that interferes with private contracts. Kisero argues that the law may be a first in the world, but it may not be the best solution to the problem of late payments.
The new law gives the competition authority powers to monitor sectors and impose reporting and prudential requirements on industries deemed to be practising abuse of buyer power. However, Kisero argues that this may not be the most effective way to address the issue of late payments.
Instead, Kisero suggests that Kenya needs a prompt payments law that is consistent with global best practice. In the West, there are laws and regulations that specify days when suppliers of common user services must be paid. Kisero argues that Kenya should follow suit and introduce a prompt payments law that protects the rights of suppliers.
County governments, which are exempted from compliance under the new law, are among the biggest culprits when it comes to late payments to suppliers and pending bills. Kisero argues that this is a clear indication that the new law may not be the solution to the problem of late payments.
Ultimately, Kenya needs a prompt payments law that protects the rights of suppliers and ensures that businesses are paid on time. This will help to prevent the collapse of businesses like Nakumatt and promote a healthy economy.
