Kenya’s largest supermarkets have become
the bane of suppliers through withholding payments for goods delivered
for as long as two years, a new report shows.
But the
suppliers of fresh produce and an assortment of processed goods fail to
raise complaints for fear of losing tenders, even when they fall deep
into debt and some close shop.
A
report by a joint ad hoc committee comprising of suppliers and retail
chain representatives named Nakumatt, Tuskys, Naivas, Uchumi and
Chandarana supermarkets as top debtors.
The report,
moderated by Kenya Association of Manufacturers chief executive Phyllis
Wakiaga and handed over to Trade Principal Secretary Chris Kiptoo last
Friday, used a representative survey of 22 suppliers over a period of 60
days to December 2016.
It found that the five
retailers owed them Sh309 million. Nakumatt and Uchumi were found to
account for 73 per cent of the debt.
“Some retailers
issue bouncing cheques despite an agreed payment period of between 90 to
120 days which has seen outstanding payments rising to Sh40 billion in
the past two years,” says the report.
“Suppliers also
have a new burden of funding promotion cost of new products where
unnecessary discounts are provided as dictated by the retail chains.
Some chains also reduce orders, forcing suppliers to bear the burden of
resale losses,” it observes.
The ad hoc committee
suggested that a code of conduct as well as a regulatory agency be
established to end the dominance of some retail chains, thought to be
using the suppliers’ money to fund new branches within Kenya and across
East Africa.
The report says that payments for fresh
produce should be effected within seven days of delivery, fast moving
consumer goods within 45 days and no payments should be withheld for
more than 60 days. The committee agreed that a Supplier Protection Fund
be established, from funds raised by retail chains, which reflects a
minimum of about 20 per cent of every retail chain’s turnover. The fund
will be manned by the soon to be established regulator. It will be used
to pay suppliers for overdue payments.
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