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Editorials

EDITORIAL: Criminalising late pay for suppliers way to go

Indeed some pending bills stretch for over two years and there are no signs that they are about to be settled. FILE PHOTO | NMG 

The proposal to criminalise the late payment of suppliers is a move that is long overdue given the extent to which businesspeople have sank into financial distress over the past few years.

Many who have supplied goods and services to national and county governments and other public agencies have found themselves in a situation where they cannot even service the loans they took on the strength of the orders they supplied to the government agencies.

That is why the level of nonperforming loans has risen steadily to 12.9 percent, according to the latest Central Bank of Kenya reports.

Through the Kenya Private Sector Alliance, suppliers have engaged with President Uhuru Kenyatta to secure the undertaking that a law will be put in place to change the fortunes of small businesses which are the main victims of the slow payments.

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Should the President persuade Parliament to pass the law and assents to it, it will become mandatory for public institutions to pay suppliers within 60 days.

Indeed some pending bills stretch for over two years and there are no signs that they are about to be settled especially when there is a change of leadership in the intervening period. Now that the President has directed that these should be paid for by the end of this month in cases where there are no queries relating to their validity, the concerned institutions ought to move with haste to implement the directive.

There are cases where county governments have accused the National Treasury of delaying in remitting their share of revenue as determined by Parliament. However, they do not explain why they do not settle the bills even after the Treasury eventually remits the money. Right now the Treasury has considerable cash in its reserves having just recently raised Sh210 billion in a third Eurobond and secured another Sh75 billion from the World Bank. It, therefore, has no excuse why it cannot remit the amounts owed to the county governments, or releasing cash for national government suppliers to be paid for that matter.

This is not to say that the malaise of late payments only afflicts the public sector. It is also rife in the private sector where businesses as well as individuals fail to pay their suppliers and other partners precisely because the latter are not considered critical to the operations of the debtor.

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