A man shops for maize flour at a supermarket in Nyeri, County. Most supermarkets have recorded low numbers of customers, a trend they blame for their failure to pay suppliers. PHOTO | FILE | NATION MEDIA GROUP The Competition Authority of Kenya (CAK) has started investigating delays by some retailers in paying suppliers.
The agency wants to protect businesses, especially small enterprises, from collapse due to constrained cash flow.
In March, CAK asked retailers and suppliers to furnish it with documents showing the payment status for deliveries made by 25 major retailers. The watchdog told the Sunday Nation that its investigations are informed by information received in April that some supermarkets may have missed payment deadlines without valid reasons.
CAK will look at the money owed for products and quantities supplied based on specific dates. The retail chains are required to provide an inventory of payment schedules for deliveries received by the end of May 14.
The law stipulates that retailers found to be withholding suppliers’ pay without a good reason will pay a hefty fine. The penalty for abuse of buyer power is a five-year prison sentence or a fine of Sh10 million or both. CAK may also impose an administrative penalty of up to 10 per cent of the undertaking’s turnover for the preceding year.
CAK’s communications and external relations manager Mugambi Mutegi said they had received retailer and supplier statements on payment status and demands that were being scrutinised.
“The authority is in the final stages of analysing the information and will, in the next two weeks, communicate the next course of action to the specific supermarkets that may have contravened the law and further engage the affected suppliers,” he said in an interview.
CAK was still receiving supplier demand statements that will enable it to determine the gravity of the problem, he said.
Sources in retail chains blame the Covid-19 pandemic for the delayed payments. This, the retailers said, is due to reduced customer visits.
But some suppliers are of the view that failure to conduct feasibility studies before embarking on expansion has led retailers to open loss-making branches that have hurt their profits, forcing them to use suppliers’ money to meet their operational expenses. SECURE SPACES “They aggressively market their brands and secure spaces deemed strategic to shield entry of a rival into the market. Suppliers and landlords who suffer the brunt of this expansion blunders are not involved in […]