Ongoing abuse of small scale suppliers by supermarkets is posing a threat to the growth of entrepreneurship in the country, Brand Kenya has warned.
Speaking to the Star on the sidelines of a breakfast meeting by Strathmore Business School, Brand Kenya chairman Chris Kirubi said the abuse has led to increased unemployment, collapse of small scale suppliers, and a threat to innovation.
He was responding to the newly launched National Trade policy by Trade Principal Secretary Chris Kiptoo that is aimed at introducing regulations to give guidelines on access to trade information and unfair competition in a bid to regulate the retail sector.
“Supermarkets have abused their power of distribution by exploiting small scale suppliers who don’t have enormous amounts of money to stay in business in the face of debts,” Kirubi said.
Most supermarkets have been operating on credit terms of approximately six months, which ends up affecting productivity of small-scale suppliers. The board also called for a ban on secondhand clothing on claims that it’s a threat to the textile industry and does not grow the economy.
“This only benefits a few people but is a hindrance to farmers who grow cotton, hence stopping creation of employment for the local textile sector,” Kirubi said.
Addressing stakeholders during the Kenya Trade Week early this month, Association of Suppliers of Kenya chairman Kimani Rugendo said it was unfair for retailers to keep expanding their businesses using money owed to suppliers instead of first paying for products that have already been sold. This is despite agreements made were written with clear terms of payment.
Rugendo expressed faith in the new policy, with expectations that it will restore sanity in the retail sector as it seeks to maintain a level playing field for suppliers, farmers, manufacturers, service providers and innovators.
According to the association, a 15 days’ payout on fresh produce and a 30 to 45 days payout on other goods will help stabilize their operations.
According to Kiptoo, a national trade facilitation committee has already been formed to implement the trade facilitation measures specified in the trade policy and in line with the WTO Trade Facilitation Agreement.
Additionally, a trade remedies law will be enacted to support the application of safeguarding, countervailing as well as antidumping measures in protection of Kenya’s domestic trade from unfair global trade practices.