This archive report was first published on 24 May 2020.
On May 24, 2020, the Competition Authority of Kenya (CAK) began investigating delays by some retailers in paying suppliers, citing a need to protect small enterprises from collapse due to constrained cash flow.
CAK's investigation follows reports in April 2020 that some supermarkets may have missed payment deadlines without valid reasons.
According to CAK, the agency will examine the money owed for products and quantities supplied based on specific dates, with retailers required to provide an inventory of payment schedules for deliveries received by May 14, 2020.
Under the law, retailers found to be withholding suppliers' pay without a good reason will face a hefty fine, including a five-year prison sentence or a fine of Sh10 million or both.
CAK's communications and external relations manager, Mugambi Mutegi, stated that the agency had received retailer and supplier statements on payment status and demands that were being scrutinized.
“The authority is in the final stages of analyzing the information and will, in the next two weeks, communicate the next course of action to the specific supermarkets that may have contravened the law and further engage the affected suppliers,” he said.
CAK was still receiving supplier demand statements that will enable it to determine the gravity of the problem, he added.
Some retailers blame the Covid-19 pandemic for the delayed payments, citing reduced customer visits. However, some suppliers argue that retailers' failure to conduct feasibility studies before expansion has led to the opening of loss-making branches that have hurt their profits.
“They aggressively market their brands and secure spaces deemed strategic to shield entry of a rival into the market. Suppliers and landlords who suffer the brunt of this expansion blunders are not involved in the plans but have no choice but to remain mute or lose market for their products,” said a supplier, who declined to be named.
