The Senate Standing Committee on Finance and Budget held a meeting today to consider and adopt the report on the Prompt Payment Bill. The Prompt Payment Bill, 2022 (Senate Bill No. 8 of 2022) was published vide a Kenya Gazette Supplement No. 195 dated 29th November 2022 and read for the First Time in the Senate on Thursday, 16th February 2023 seeks to provide for a legal framework for prompt payment for supply of goods, works and services procured by government entities at both levels of Government.
It requires among others a procuring entity in the national or county governments to pay a supplier by the prescribed payment date failure to which, a procuring entity shall be liable to pay an interest calculated on the basis of the Central Bank base rates and a fine not exceeding one million shillings or to imprisonment for a term not exceeding five years or to both fine and imprisonment for an accounting officer who, without reasonable cause or negligently fails to pay the amount due.
The Bill further provides that where a procuring entity returns an invoice, the procuring entity shall pay the supplier at least fifty percent of the amount due or as the procuring entity and the supplier may agree and in that respect, a supplier who receives an invoice from a procuring entity shall, within fourteen days, deliver a corrected invoice to the procuring entity. Interest shall accrue upon the expiration of fourteen days after the receipt by the procuring entity of a corrected invoice or after the prescribed payment date, whichever is later.
The Bill sponsored by Sen. Mariam Omar was committed to the Standing Committee on Finance and Budget for consideration pursuant to the provisions of Article 118 of the Constitution and standing order 145 of the Senate Standing Orders.
In today`s meeting which was chaired by the Mombasa County Senator Mohamed Faki, the committee adopted a report recommending rejection of the Bill by the Senate.
The committee noted that while the Bill would be an effective legal tool to promote business and cure late payments, the public procuring entities entirely depend on the availability of funds from the exchequer with the exchequer releases depending on the revenue collection performance which at times fails to follow the planned projections.
The committee warned that the proposed interest rates to be charged to procurement entities as a result of late payments will be an additional cost and burden to the existing menace of pending bills.
In addition, the committee argued that the proposed penalties under offenses to accounting officers of procurement entities are exorbitant, noting that the officers have little control over the availability of funds to meet the financial obligation when they fall due.
Further, members said in the report that the provisions in the Bill have adequately been addressed under the Public Procurement and Asset Disposal (PPAD) Act, 2015, and its attendant Regulations that were approved by Parliament in 2020.
The committee held meetings with various stakeholders during the consideration of the Bill who submitted their views on the Bill among them the Council of Governors (CoG), Commission on Revenue Allocation (CRA), Controller of Budget (CoB), Kenya Private Sector Alliance (KEPSA), and the Institute of Certified Public Accountants of Kenya (ICPAK).
In addition, the National Treasury and Economic Planning, the National Gender Equality Commission, the Association of Public Relations and Communication Management Firms (APRECOM), and the Institute of Social Accountability (TISA) submitted their views on the Bill.
The sponsor of the Bill Sen. Mariam Omar who also held a session with the committee during consideration has however differed with the committee`s recommendations saying she will continue prosecuting the Bill in the Senate hoping to convince the House to support it.
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