Manufacturers supplying their goods to Tuskys Supermarket want the state to urgently intervene and ensure that money owed to them by the retail store is paid to avoid a full-blown debt crisis.
The suppliers are nervous over the debt stand-off as they stare a possible collapse that like that of Nakumatt and Uchumi supermarkets, which sank with Sh18 billion owed to suppliers.
Tuskys has admitted that they facing challenging financial crisis due to constrained cash flow since the break out of covid-19 which has affected many businesses.
The effects of the pandemic is pushing the retailer to reduce or delay payments to supplier, financial institutions and banks.
“We had renegotiated payment terms, but while offering reassurances that we planned to honour the payments but we may not honour those payments at the agreed time” said Dan Githua, the chief executive officer.
Tuskys has however maintained that it is committed to protecting the interests of its suppliers but the latest dispute has pushedd manufacturers to write to the Ministry of Industrialization and Trade and the Competition Authority of Kenya (CAK) to speedily break the impasse.
Kenya Association of Manufacturers (KAM) chief executive Phyllis Wakiaga pointed that they have held talks with the retailer on the delayedd payments but a prolonged standoff will hurt the manufacturing sector.
“Tuskys had promised to undertake various measures to pay for goods supplied but manufacturers have informed us that their payments remain outstanding to date for goods supplied as early as this year,” Ms Wakiaga said in a letter to Tuskys.
In the letter, which is copied to Industrialization and Trade Cabinet Secretary Betty Maina and CAK Director-General Wang’ombe Kariuki, the lobby wants Tuskys to provide more detailed information on its proposed payment plans for it’s suppliers.
The plan must indicate the average payment periods and a detailed financial plan on its current financial measures.
Mr Githua has blamed measures taken to stem the spread of Covid-19 such as social distancing and reduced operating hours for lower traffic in its stores and lower sales.
Tuskys has shut some branches and merged others in efforts to prevent losses at individual stores.
“Despite these efforts, some supplier obligations may be deferred and therefore some of your members have been impacted. We have communicated individually to these suppliers that their payments will be delayed,” Mr Githua said.
Customers continue to report stock-outs in a number of the retailer’s branches around the country.
In 2018, CAK established a Buyer Power Department to deal with potential abuses by retailers and unnecessary delays in settling supplier debts.
The unit was created after the collapse of Nakumatt and Uchumi that went with billions of shillings of supplier debt unpaid.
Kenya enacted new laws last year that compels retailers to pay their suppliers within 90 days, failure to which one risks a jail term of up to five years or a Sh10 million fine.