Business owners and government institutions who fail to pay suppliers will face a fine of up to Ksh1 Million in a new bill that's currently in parliament.
The Prompt Payments Bill 2021, seeks to tame the rise in overdue payments which affects the cash flows of suppliers.
In the proposed law, an accounting officer who, without reasonable cause or negligently fails to pay the amount due commits an offense and shall be liable to pay a fine not exceeding Ksh1 million.
The accounting officer also risks a jail term of up to five years or both the fine and imprisonment.
Government entities have been the biggest culprit in delayed payments to suppliers with the agencies collectively owing suppliers Ksh435 billion.
The bill further proposes a Ksh5 million fine or a 5-year jail term for an accounting officer who fails to return an invoice or pay the amount due by the prescribed payment date or interest.
A number of government agencies have committed to clear debts owed to suppliers after the release of money from the National Treasury.
In September 2020, the government began the process of clearing debt owed by the Prisons department amounting to Ksh 5.7 billion.
Principal Secretary for Correctional Services Zeinab Hussein in a statement disclosed that the cabinet had directed the State Department through the Pending Bills Multi-agency Team (PB-MAT) to undertake a final and thorough verification of the pending claims.
Following successful verification of the historical outstanding pending claims by the state department as directed by the cabinet, the national government provided sufficient funds to settle the claims.
In the same month, the Kenya Meat Commission also cleared the bulk of debts, Ksh250 million, it owed livestock farmers and other suppliers since it was taken over by the military.
