Government To Pay Up Suppliers On Time Or Face Criminal Charges


Following a discussion between President Uhuru Kenyatta and Kenya Private Sector Alliance (Kepsa) representatives on how to boost the fortunes of many small businesses hit by unpaid supplies in an environment of credit constraint, the President directed on Saturday that all pending payments that do not have audit queries be cleared by June 30.

“Unfortunately, pending payments have negatively affected many businesses, particularly those whose bulk of capital is now locked in non-payment. This has also reduced overall spending and business activity in our economy,” said the President during Madaraka day celebrations.

President Uhuru said the Government is the largest consumer of goods and services in the economy and many small businesses are built to service this demand, agreeing to the fast-tracking of all pending payments and have a 60–day cap for payments included in upcoming Finance Bill.

Any government official looking to intentionally divert funds meant for suppliers will have violated The Finance Bill. This means business transactions between private sector and government will be settled promptly starting 2019/2020 financial year that starts next month. Prompt payments are expected to inject liquidity into the economy, enhance survival for SMEs and lower non-performing loans (NPLs).

“Prompt settlement of delayed payments by the government and private sector entities will curtail a further increase in NPLs and support economic growth,” said CBK Governor in a Monetary Policy Press Statement.

Uhuru also addressed the issue of delayed pre and post-shipment verification process, delayed Value added tax refunds from Kenya Revenue Authority and high power costs. He ordered the Kenya Ports Authority, Kenya Revenue Authority and Kenya Bureau of Standards to honour pre-shipment inspections done by KEBS appointed agents.

“Imported goods, therefore, should not be subjected to additional inspection at the Port of entry except for cases legitimately suspected not to conform to the set standards,” said the President.

He added that the Government will also initiate business tax reforms and the restructuring of port logistics operations a directive will ease of doing business in Kenya and protection of the public from harmful imports.