Will the Treasury Sh133bn suppliers’ cut save SMEs from auctions?

The Treasury through Treasury Secretary Ukur Yatani on Wednesday, March 11, 2020, announced it had reduced awaiting bills by nearly 90% offering relief to suppliers and contractors that have been the target of auctioneers.

Mr. Yatani says the pending bills have dropped Sh18.71 from Sh152 billion to billion over the last 18 months in a rapid payment scheme designed to improve the affluence of small businesses and easing cash crises across all sectors.

About Sh87.3 billion of the Sh152 billion pending bills were considered as uncertain and lacked evidence to show goods and services offered to the government, leaving the ministries and counties to settle Sh46 billion.

In reference to unpaid bills by the counties Mr. Yatani said “The amount of eligible pending bills paid as at March 6, 2020, is Sh32.9 billion, leaving an outstanding balance of Sh18.34 billion,” adding that, “of the eligible bills amounting to Sh13.5 billion, a total of sh13.1 billion has been paid by various ministries, departments and agencies. The national government departments are in the process of settling the remaining Sh370 million.”

Despite the State being the biggest spender in the country, it has registered a slow payment of the pending bills causing financial pain with many small and medium-sized businesses, which have government contracts, blacklisted by credit reference bureaux after falling behind on loan repayments or defaulting.

It is expected that the move by the treasury will increase money circulation which in the year 2019 dropped to a five-year low.