Dominant supermarket chains to face regulation to protect suppliers

Kenyan supermarkets owe suppliers up to Sh48 billion. FILE PHOTO | NMG
Kenyan supermarkets owe suppliers up to Sh48 billion. FILE PHOTO | NMG  

Dominant supermarket chains will face closer State scrutiny to protect suppliers from exploitation, Trade Principal Secretary Chris Kiptoo has said.

The National Trade Policy launched Monday aims at introducing regulations to police the retail sector, including giving guidelines on access to trade information and unfair competition.

Mr Kiptoo said during the policy launch that dominance has created an unfair playing filed for smaller suppliers and worsened the debt burden for major retailers such as Nakumatt and Uchumi #ticker:UCHM whose financial woes now spread wide as many traders are affected.

“We had allowed them to self-regulate but that has failed and that is why we have retailers owing suppliers up to Sh48 billion now and because it is attributed largely to one retailer, many suppliers are affected at the same time,” said Mr Kiptoo.

An ad hoc committee set up by the Industrialisation ministry to look into the issue of delayed payments last year recommended the setting up of a regulatory body to protect suppliers from exploitative retailers.

The retail sub-sector is currently entangled in heavy debt with two of the largest retail chains now faced with stock-outs.

Nakumatt, which has been a major retail chain in the region, has been experiencing financial difficulties with its workers now put on weekly wages, shelves largely stocked out and creditors in hot pursuit of unpaid rental and other arrears.

Uchumi Supermarkets, on the other hand, has been surviving on government bailouts and suppliers’ goodwill hence the latest move by government to step in through the new regulations.

The policy document also aims at supporting smaller retailers who have suffered under the dominance of larger players who give price advantages and undercut them, especially in small towns.

“The large supermarkets are setting up branches in small towns and as a result of their bulk procurement they receive substantial trade discounts that enable them to offer lower prices leading to unfair competition with the small-scale retailers, “the policy document reads.

It recommends the development of an enabling, business friendly-regulatory framework for the retail sub-sector to encourage competitive and fair trade practices.

Kenya also hopes to use the new policy framework to boost international trade and reduce the balance of trade which has been widening amidst tight competition from international trading partners.

Various stakeholders called for speedy implementation of the new policy, which also seeks to give priority to locally manufactured goods to promote job creation and economic growth.

Kenya Association of Manufacturers CEO Phyllis Wakiaga said the prescriptions for buy Kenya build Kenya in the policy will go a long way in fostering the culture of giving preference to home-made items.

“This far we have reached is commendable and I only hope that we get to the critical phase which is implementation and we remain passionate in driving these policies that will transform trade in Kenya,” Ms Wakiaga said.