Supermarkets take on suppliers over debts

Supermarkets and suppliers were yesterday involved in a heated debate over the proposal to regulate the retail sector even as the government insisted on implementing the plan.

While retailers made veiled attempts at resisting the new policy in totality, suppliers pushed hard for the inclusion of stringent measures including penalties for delayed payments and disclosure of capitalisation in the new framework launched on Monday.

Suppliers said they have suffered for long due to the lack of a regulator who can protect their interests.

They said badly-managed retailers use their credit to expand while their businesses struggle with heavy debt.

READ: Dominant supermarket chains to face regulation to protect suppliers

Association of Suppliers of Kenya Chairman Kimani Rugendo said most retailers take advantage of the trust vested in them by suppliers to either delay payments or refuse to clear their dues.

“We will not supply without written agreements with clear terms of payment plans. We have done that before and ended up with debt,” Mr Rugendo told attendants at the ongoing Kenya Trade Week at the Kenyatta International Convention Centre.

Suppliers want immediate payments for their goods or have the new retail sector regulations to stipulate a 15-day payment period for fresh produce while allowing between 30 and 45 days for other goods.

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They also want the setting up of an office to handle matters of fair trade, a board to implement a code of practice and a disputes tribunal for the sector.

Retailers, however, opposed some of the proposals saying they may stifle the sector in the long run.

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They particularly rejected a bid to have them pay suppliers on delivery, a method they say cannot work with supermarkets.

Retail Trade Association of Kenya Director Willy Kimani defended the retail chains from allegations of poor management and misuse of suppliers’ credit to expand.

He said while regulations are important in any sector, retailers need to come up with a mutual agreement on payment plan to stop debts from piling.

“We also have unhealthy competition among suppliers who simply flood our shelves with products just to keep away their competition from accessing the market. We can only pay for what we have sold and the more products stay in the shelves, the more the delay in payment,” Mr Kimani said.

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Trade Principal Secretary Chris Kiptoo assured the retailers that the new regulations, which would be expanded for legislation in the next Parliament, are not meant to stifle the sector.

The sector which contributes about 5 per cent to the country’s total wealth has been affected by challenges such as heavy debts, labour unrest and stock-outs.

Uchumi #ticker:UCHM and Nakumatt supermarkets have been forced to shut several branches including those located outside Kenya.

The retailers said the local micro-economic environment is increasingly becoming unfavourable adding that capping interest rates has led to the drying up credit.


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