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Suppliers to blackist retail chains delaying payments

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Tuskys supermarket Greenspan Mall branch in Nairobi. PHOTO | SALATON NAJU | NMG

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Summary

  • Nakumatt, Uchumi and Tuskys have gone down with nearly Sh30 billion owed to suppliers in under five years, pushing some of small traders on the verge of collapse.
  • KAM says the credit information sharing mechanism between factories and suppliers, signed a fortnight ago, aims to put to an end a trend where retail stores have been rushing to the next supplier after defaulting on payment to one trader.

Manufacturers and suppliers plan to start blacklisting supermarkets which default on payment for deliveries in a bid to prevent a repeat of losses recently witnessed after collapse of three giant retailers.

Nakumatt, Uchumi and Tuskys have gone down with nearly Sh30 billion owed to suppliers in under five years, pushing some of small traders on the verge of collapse.

The Kenya Association of Manufacturers (KAM) says the credit information sharing mechanism between factories and suppliers, signed a fortnight ago, aims to put to an end a trend where retail stores have been rushing to the next supplier after defaulting on payment to one trader.

The Industry Credit Group (ICG) to be managed by Veri-Credit will enable members of KAM and Association of Kenya Suppliers (AKS) to unanimously share payment history of different supermarkets, helping shape their decision on supplies. It is modelled on the credit reference bureaus that offer lenders borrowers’ loan repayment information, including defaulters.

Banks in Kenya say lack of credit reference information is a major contributing factor to soaring costs of credit due to incomplete borrowers’ information.

“We found, overtime, that there are notorious bad payers who will take (stock) from one manufacturer, spoil that credit then move to another and repeat the same, and because of competition pressures people keep giving merchandise,” KAM chairman Mucai Kunyiha said.

“In some sectors, especially in retail segment, what we have seen is that when they go bad, a lot of money has already been put in because people thought they were gaining market share and didn’t know what was going on at the background.”