There is still no law in sight to compel government to promptly pay Small and Medium Enterprises (SMEs) that have done business with state agencies, leaving room for continued delays and frustration for suppliers.
Kenya Private Sector Alliance (Kepsa) chief executive officer Carole Kariuki says lack of a legal framework has left businesses at the mercy of government ministries and parastatals four years after the matter was first discussed with President Uhuru Kenyatta.
The delayed payments that at times run up to years have plunged many SMEs into cash-flow problems leading to laying off of workers, auctioning by banks and closures. Others delay on projects besides delaying on staff salaries.
“We have discussed it at presidential round tables many times since 2015. It has taken long to implement. Some ministries have become better at paying but not all,” Ms Kariuki told the Business Daily.
She added that the private sector is yet to come up with policy proposals to table before the Treasury and the National Assembly, with opinion still divided on whether to make changes to the public procurement law or craft fresh legislation.
Plenser Limited, a local engineering firm, said in 2017 that it was yet to receive payment from the Nairobi County government for an incinerator it installed at Mbagathi Hospital in 2015. The late payments crisis continue to hurt SMEs that are also grappling with difficulties in accessing loans from local banks who cut credit available to small businesses after the government capped interest on loans at 7.5 per cent in 2017. The sector accounts for nearly 90 per cent of total jobs created annually, highlighting its significance to the country’s economic growth.
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