Local manufacturers have blamed delayed payments for poor supplies to State agencies despite a push by the State for purchase of goods from the domestic market under the Buy- Kenya Build- Kenya (BKBK) initiative.
The main objective of the strategy is to boost competitiveness and use of locally made goods and services.
Uptake of imported items by public agencies has, however, continued to soar with Central Bank of Kenya (CBK) data showing that the value of imports ordered by government agencies hit an all-time high of Sh110.9 billion in the 12 months to December last year, partly attributed to a weakened shilling in the first quarter of the year and sustained appetite for foreign goods.
“A major obstacle remains-prolonged delays in settling payments by government entities. This issue severely impacts the cash flow of local industries, especially MSMEs, which rely on steady revenue to sustain their operations,” Tobias Alando, the chief executive officer of the Kenya Manufacturers Association (KAM) told the Business Daily.
“Unlike large firms that can absorb delayed payments, MSMEs struggle to survive if payments are held up for more than three months… As a result, many manufacturers are forced to work through third-party agents who offer upfront payments, undermining the direct procurement model that BKBK seeks to promote,” the CEO added.
BKBK policy, which arose from a presidential edict in June 2015, requires at least 40 percent of supplies to ministries, departments, and agencies be sourced from local companies.
The main commodities targeted in the strategy are agricultural products, construction materials, the textile industry, pharmaceutical and health products, furniture, and information and communication technology.
The National Treasury has previously accused local suppliers of frustrating the BKBK initiative. KAM said that the BKBK initiative would only be successful if the State addressed the delayed payments debacle.
It urged the State to push for Parliament’s nod for the Prompt Payment Bill, which aims to ensure timely payments and create a more favorable environment for local manufacturers.
“While industries are ready to invest and meet the quality expectations of government buyers, addressing delayed payments is crucial for the long-term sustainability of the BKBK strategy,” Mr Alando said.
Although the CBK does not expressly disclose particulars of the imports, items commonly ordered by State departments and agencies are furniture, stationery, machinery, motor vehicles, textiles, and arms, among others.
The CBK statistics show that the government in October 2024 imported items worth Sh24.8billion—a record for a single month.
This was followed by an equally high monthly performance in January and February, with imports worth Sh13 billion and attributable to the weak shilling. December last year recorded the lowest value of government imports worth Sh2.3 billion.
