Public and private entities who fail to settle debts could soon be blacklisted after manufacturers and suppliers formed a common-user credit information-sharing platform.
The new entity, Industry Credit Group (ICG) created by the Kenya Association of Manufacturers (KAM), Veri-Credit and Association of Kenya Suppliers (AKS) will have a database on errant firms open to all companies with the worst payers flagged thereby denying them a chance to the supplier shop.
ICG will see credit professionals in member companies meet to compare negative information and exchange data on payment practices thereby helping companies make informed decisions on future dealings with offending entities.
KAM board chairman Mucai Kunyiha said ICG’s formation responds to growing supplier and manufacturer-debts owed mostly by government entities.
This has hurt manufacturers’ and suppliers’ ability to meet their financial obligations, operational expenses and adversely affected their relationship with individual suppliers.
“Many businesses experience a lot of administrative and financial burdens due to late and non-payment. Late payments to SMEs stifle innovation and growth of the manufacturing sector,” said Mr Kunyiha.
Veri-Credit director Stephen Mills welcomed the new platform saying exposing bad payers will reduce incidents of late and withheld payments.
The move follows growing concerns over rising pending bills that stood at Sh334.2 billion by August 2020, being a 517 percent jump from Sh64.7 billion reported in June last year.
According to the latest budgetary and economic review State corporations are the worst debtors at 86 percent with the rest held by ministries and departments.
KAM adds that as at July 2020, Uchumi owed Sh4.7 billion to over 100 suppliers, Nakumatt (Sh18 billion) as at August 2020 while Tuskys Holdings owed suppliers a total Sh6.2 billion.
Association of Kenya Suppliers chief executive Ishmail Bett said perennial prompt payment challenges call for such innovations where companies can avoid dealing with late payers.
