The cabinet gave the green light to settle 28,726 verified claims worth KSh23.74 billion, covering 98 per cent of the 29,257 claims recommended for payment after a review by the Pending Bills Verification Committee.
Payments will be aimed at government suppliers and contractors owed KSh50 million or less, with priority for micro, small and medium enterprises, especially those owned by women, young people and persons with disabilities.
Kenya National Chamber of Commerce and Industry welcomed the decision, and its president Erick Ruto said it would bring much-needed relief to businesses that have endured delayed payments, some dating back to 2005.
“This will go a long way in relieving the pain of many MSMEs and businesses that have suffered as a result of the delays in payments,” Ruto said.
Ruto cautioned that the approved payout is only an initial step and that prolonged verification processes have already cost firms opportunities and eroded claim values through inflation.
The Pending Bills Verification Committee had received 115,617 claims totalling KSh664.8 billion; after its review it recommended settlement of 29,257 claims valued at KSh155.34 billion.
While the KSh23.74 billion approved represents a large share of the recommended claims, a substantial balance remains for further action.
KNCCI called on national and county governments to accelerate verification of outstanding claims and to settle them promptly.
The chamber also urged a reduction in the cost of doing business by harmonising taxes, levies, fees and charges, and called for improved access to affordable, appropriate and patient financing.
Delayed payments have long tied up working capital needed for wages, stock, tax obligations and loan repayments, and for smaller firms they can disrupt operations and limit new contract opportunities.
Citing a 2016 MSME survey, KNCCI noted that Kenya has more than 7.4 million micro, small and medium enterprises employing over 14.4 million people and contributing about 33.8 per cent of gross domestic product.
Ruto urged both levels of government to sustain focus on the sector and to implement policy commitments made through engagements with business representatives.
The chamber’s statement signals that, although the approval is a positive development, businesses seek a comprehensive and predictable framework for clearing verified arrears together with reforms to lower operating costs.
The key test will be how quickly the approved payments reach beneficiaries and whether a reliable payment system can be established to prevent fresh arrears.
