Economy

KAM roots for punitive law on pending bills

gudka

Kenya Association of Manufacturers Chairman Sachen Gudka. FILE PHOTO | NMG

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Summary

  • The Kenya Association of Manufacturers (KAM) wants a stricter statute enacted to compel both private and public sectors to honour outstanding bills within 90 days.

Industrialists are pushing for punitive legislation to force firms and government entities to settle unpaid bills, saying the current stalemate was hurting the growth of small and medium enterprises (SMEs).

The Kenya Association of Manufacturers (KAM) wants a stricter statute enacted to compel both private and public sectors to honour outstanding bills within 90 days.

“We have a situation where government pays private sector late, the private sector pays itself late and government pays itself late. It is a vicious cycle,” said Chairman Sachen Gudka.

The lobby said the recent fiscal measures taken by the Treasury as well as the Competition Authority of Kenya’s law on abuse of buyer power are inadequate.

The Treasury has directed all ministries, departments and agencies (MDAs) as well as the counties to treat pending bills as first charge on every cash disbursed. The MDAs and counties owed suppliers and contractors Sh64.7 billion and Sh88.98 billion respectively by end of 2018/19.

Abuse of buyer power law — which punishes firms for taking advantage of their market dominance position to hold payment for longer periods — has been criticised by the private sector for its “burden of proof” provision

The burden of proof requires the complainant to prove a payment agreement infringement and demonstrate that such delays restrict or distort competition.