Proposed supplies pay rules split forum
1 months ago, 14 Feb 16:24
At a pre-budget forum held in Nairobi on Wednesday, the Institute of Economic Affairs (IEA) and the Kenya Association of Manufacturers (KAM) clashed openly over a proposal to charge interest on payments released after a "legal" credit period.
The faceoff relates to the long standing campaign by the trade ministry to draft the Retail Trade Sector Prompt Payment Regulation that automatically imposes interest on payments that remain outstanding for more than 60 days.
The KAM which says its members are owed Sh400 billion says the regulations are not only being developed for Kenya but will form a regional code of payment for the East African Community. "
If the payments are not made promptly, there's a penalty that should be introduced because somebody is withholding your cash that you should be multiplying every day," said KAM's head of policy and research Job Wanjohi. "
So instead of the multiplier effect that you could be having on the economic activities, you ensure that this person is paying some penalties for the delay in payments."
There's efficiency that comes from payments that are prompt, but I don't see it as a business of the government to start telling us you must pay in 60 days," Mr Owino said. "
The law in the 28-nation European Union allows companies to negotiate for payment period, but must start paying €40 (Sh4,997) in administrative charges as soon as they fail to honour payments on the date stipulated in the contract.
Category: business news