Kenyan retailers will now be required to pay suppliers interest on delayed payments in new rules published by the Competition Authority of Kenya (CAK).
The new rules are contained in the Retail Trade Code of Practice.
“A retailer shall pay interest for delayed payments. The interest rate payable shall be agreed by the retailer and supplier in their Joint Business Plan or Supplier Agreement.”
“A retailer shall pay any undisputed amount in the Statement of Account after the clarifications, in accordance to the terms stipulated in the Supply Agreement or Joint Business Plan as issues of any disputed amounts are being sorted out between the supplier and the retailer. “
However, disputes arising as a result of delayed payments or dispute claims shall be handled by the Retail Trade Dispute Settlement Committee.
The seven-member committee comprises chairs and CEOs of the Retail Trade Association of Kenya (Retrak), Kenya Association of Manufacturers (KAM) and Association of Kenya Suppliers (AKS).
It shall have a nominee of the Council of Governors and the Ministry of Trade.
“The Committee’s decision shall be by consensus. The decision of the Committee shall be binding on all the parties to the dispute before it,” the code states.
In 2019, manufacturers, retailers, and suppliers voluntarily signed up to the Code of Practice to guide Prompt Payment making it difficult for Kenya’s retail sector to engage in unfair trading practices.
The study by the Association of Suppliers of Kenya (ASK) revealed that by December 31, 2016, five supermarkets accounted for 92 per cent of the total debt owed for more than 60 days.