The Kenya Association of Manufacturers (KAM) has proposed measures to reduce the multi-billion pending bills crippling the national and county governments.
In the Manufacturing Priority Agenda 2024, KAM has proposed the enactment of the Prompt Payment Bill 2021. This bill outlines the fines and penalties for anyone for fails to pay suppliers on time.
Per the bill, any accounting officer who fails to pay suppliers within the stipulated time without a valid reason commits a fine and faces a fine of Ksh5 million or five years imprisonment or both.
The bill's objective is to put in place a legal framework to facilitate prompt payment for the supply of goods, works and services procured by government entities both at the national and county levels.
In the bill sponsored by Nairobi Governor Johnson Sakaja (then Senator) and nominated senator Farhiya Haji, all procuring entities will be required to pay an interest calculated based on the Central Bank of Kenya rates.
"The bill provides for the requirement of the procuring entity and the supplier to deal with each other fairly and lawfully, and the power to make regulations by the Cabinet Secretary," reads part of the bill.
Mean KAM, noted that by enacting this bill the pending bills will reduce from the current Ksh567.7 billion as of June 2023. This will reduce the backlogs of pending bills by the government.
Another measure suggested by the association is the establishment of the Tax Refund Fund which will cater for all the refunds to suppliers among others.
Additionally, both governments were asked to create a three-year plan to clear pending bills. KAM noted that this would resolve the delay which has resulted in strained finances, unpaid employees and obstacles in the operating process.
"The delay in tax refunds can postpone or cancel planned investments by manufacturers in new equipment, technology, or expansion projects. This can lead to a slowdown in economic activity within the sector," read part of the report.
The government should also implement the 60-day payment period provided for under the Public Procurement and Assets Disposal Regulations 2020.
Conclusively, the government was urged to ensure all purchases are paid through the Integrated Financial Management Information System (IFMIS) which will enable faster reporting of local procurement, address prompt payments as well as enhance transparency and accountability.
