Economy

Agencies to pay suppliers in 60 days after Bill review

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The National Assembly Committee on Finance and National Planning chair Gladys Wanga. FILE PHOTO | NMG

Public entities will be compelled to pay suppliers of goods and services within two months of receiving an invoice.

This follows changes to the Prompt Payments Bill that had recommended payment within 90 days.

The National Assembly’s Finance Committee reduced the payment period in line with the two months prescribed in the Public Procurement and Asset Disposal Regulations, 2020.

The Bill is meant to tame the rise in pending bills that have sent contractors and small businesses into cash flow woes, forcing some to close down or reduce the number of staff to remain afloat.

“The committee has proposed that payment be made within 60 days. This will ensure suppliers of goods and services to ministries, departments and agencies are paid in time hence increasing liquidity of such businesses, leading to growth of small and medium enterprises and creating of employment opportunities,” the committee said in a report on the scrutiny of the Bill.

Pending bills by MDAs stood at Sh467.7 billion as at December last year. Businesses are also grappling with billions of shillings in unpaid bills by counties despite directives by the Treasury to pay contractors.

Lobbies such as Kenya Association Manufacturers have warned that the ballooning bills by State and county entities are hurting business recovery from the Covid-19 economic fallout.

The Senate passed the Bill in December, paving the way for the National Assembly to second it ahead of its passage into law. The proposed law has, however, exempted private firms.

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