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Suppliers back regulation of retailers

Suppliers of goods to supermarkets have supported calls for formation of a regulator to help fast track payments by retailers.

The Industrialisation ministry last year formed an ad hoc committee to look into the issue of delayed payments.

The team recommended the establishment of such a regulatory body.

Suppliers Association of Kenya chief executive Ishmael Bett said a strong regulator would make retail chain operators pay promptly for goods received thereby reducing the high level of debt among suppliers and farmers.

“We welcome the idea of the government stepping in as a regulator as it will be a win-win situation for all of us.

The challenge for suppliers has been in trying to understand why retail chains take long to pay for deliveries while they deal in cash-only sales,” he said.

Mr Bett spoke at the Industrialisation ministry where he and other members of the committee presented a status report on the matter.

The taskforce formed drew members from suppliers, retailers and the Kenya Association of Manufacturers, with its formation prompted by fears that retailers could be using money owed to suppliers to fund unsustainable expansion.

The total amount the retail sector owes suppliers has been a matter of dispute, but KAM puts the big three’s-Nakumatt, Tuskys and Naivas- debt at Sh8 billion.

Suppliers have in the past said the non-payment has forced them to take up loans to fund their operations leaving them with a major debt burden.

In an earlier meeting between retailers and suppliers in Nairobi, the latter lamented that delayed payments had frozen their expansion and some of them lost their businesses to auctioneers.

The committee’s report called for adoption of international best practice in supplier-retail chain relationship as well as development of the code of conduct to guide the sector. They also recommended that a tribunal be constituted to handle disputes within the sector.

Trade principal secretary Chris Kiptoo said the government will consider the findings.

“The findings will assist us develop efficient processes that promote fair play while eradicating tendencies where retail chains use their market niche to hurt small businesses. This sector has been unregulated for a while and we want to ensure that there is a code of practice for all players to adhere to,” he said.

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