This archive report was first published on 24 May 2020.
Published on May 24, 2020, the Competition Authority of Kenya (CAK) has launched an investigation into delayed payments by some retailers to their suppliers.
The agency's move is aimed at safeguarding small businesses, particularly those in the retail sector, from collapse due to cash flow constraints.
CAK has asked retailers and suppliers to provide documents showing the payment status for deliveries made by 25 major retailers by the end of May 14.
The law stipulates that retailers found to be withholding suppliers' pay without a valid reason will face a hefty fine, with a penalty of up to Sh10 million or a five-year prison sentence.
CAK's communications manager, Mugambi Mutegi, said the authority is analyzing the information received and will communicate the next course of action to the specific supermarkets that may have contravened the law within the next two weeks.
Some retailers blame the Covid-19 pandemic for the delayed payments, citing reduced customer visits as the reason.
However, some suppliers argue that the failure of retailers to conduct feasibility studies before expanding has led to the opening of loss-making branches, which has hurt their profits and forced them to use suppliers' money to meet operational expenses.
