Following closely to a trend that saw Nakummatt supermarkets close, Suppliers who are still recovering from non-payment after Nakumatt’s collapse cost them KSh 18 billion have asked the Kenyan government to intervene in the matter of payments owed by Tuskys supermarket.
Tuskys have not been paying the suppliers and have recently warned that they might delay some payments due to the Coronavirus pandemic.
Tuskys issued a statement apologizing to suppliers over delays that came with the restructured payment schedules on May 20th. The CEO, Dan Githua said that the company would release payments scheduled in April and May towards June. This did not come to pass.
The suppliers have now written to the Ministry of Industrialization and the competition authority to intervene and force Tuskys to pay up. In the letter, the manufacturers claim that some payments date back to early in the year further accusing the retailer of poor communication.
The Kenyan Association of Manufacturers (KAM) has asked the retailer to immediately provide detailed information regarding the proposed payment plan, including average payment periods.
Tuskys is going against government directives that require retailers to pay their suppliers within 90 days. The Competition Authority of Kenya (CAK) has started investigating delays by some retailers in paying suppliers. The agency wants to protect businesses, especially small enterprises, from collapse due to constrained cash flow.
The law stipulates that retailers who are found to be withholding suppliers’ pay without a good reason will pay a hefty fine. The penalty for abuse of buyer power is a five-year prison sentence or a fine of Sh10 million or both. CAK may also impose an administrative penalty of up to 10 per cent of the undertaking’s turnover for the preceding year.
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