Retailers will now pay suppliers their dues within a stipulated time according to a new directive by the government.
The newly launched Retail Code of Practice states that retailers will be penalised if they fail to adhere to the new guidelines. The move is part of Kenyan government initiative to enhance self-regulation in the industry previously dogged with cash crunch that affected the value chain due to payment delays to suppliers.
Present at the launch was the technical committee comprised of the Association of Kenya Suppliers, Kenya Association of Manufacturers, Retail Traders Association of Kenya (Retrak) and other players in the private sector.
“This move is expected to remedy any potential squeeze on cash flow to allow business thrive,” Trade Principal Secretary Chris Kiptoo said.
He added that the code would make the industry more vibrant, encourage self-regulation and harmonize retailer-supplier engagements.
Supermarkets have been delaying to pay suppliers, particularly those from small and medium enterprises (SMEs).
In October 2016, suppliers of fresh produce and processed products complained that the supermarkets withheld an estimated Ksh40 billion, injuring their cash flows and even forcing some of them into bankruptcy.
The code gives retailers a window to notify their suppliers in seven days or within 24 hours of any anomalies for perishable goods that could affect payment arrangements.
In case of conflicts involving retailers and suppliers the retail code of practice assures “disputes to be resolved by retail trade dispute settlement committee (Section 18).”
These regulations will soon be anchored on Trade Development Act whose process of enactment is at an advanced stage.