Pain of doing business with counties
A skip bin for waste disposal is placed on a Nyeri street on October 22, 2019.
When Mr James Njukia successfully bidded for a tender to supply skip bins (litter containers) to Kiambu County government last year, it was a relief for his firm given the contract came at a time businesses were beginning to bleed from the economic turmoil caused by the Covid -19 pandemic.
Keen not to lose the deal, Mr Njukia, who then did not have the needed capital, sourced a loan from Credit Bank to supply the county government with 25 bins at a cost of Sh7.4 million, which was to be paid after delivery.
On April 15, 2020, his Manyota Limited received a letter confirming that it had been awarded the tender and two days later, he wrote back confirming his intention to proceed with the contract.
He delivered the bins that were immediately launched by the governor.
However, unknown to him, a deal he hoped would cushion his business from the effects of the pandemic has turned into a nightmare for him and his family following delayed payment, and now his family home risks being auctioned for loan non-payment.
Despite sending an invoice on September 24, 2020, the county has not met its contractual obligation, and consequently, Mr Njukia has been unable to settle the loan that has since accumulated interest. His desperate efforts to nudge the regional government have been in vain.
A letter written to him by Credit Bank on May 26 demanded that he clears the loan within 14 days, failure to which the bank would institute its own recovery process at the company’s own costs.
Debt recovery
“Take further notice that, failure to comply with this demand within the next fourteen days (that is by 10th June 2021) and pay the bank the said amount currently in arrears, all your facilities shall stand due and the bank shall without further notice institute recovery process against yourself at your own costs and consequences incidental thereto,” said the letter signed by Ms Grace Muthengi and Mr Frank Muthui from the bank’s debt recovery unit.
“The bank is now at the point of recovering the money since they feel I am making no efforts to pay. Auctioneers can descend on my home anytime because the bank has continuously sent demand letters that I have been managing to act on and time has lapsed,” Mr Njukia said.
The businessman epitomises the pain suppliers and contractors endure after doing business with counties, where many of them risk losing assets over unpaid bills amounting to tens of billions of shillings.
In June this year, Treasury Cabinet Secretary Ukur Yatani sought Parliament's approval to temporarily stop funds to counties that have consistently failed to pay suppliers, arguing delays had led to liquidity problems at a time when most companies are suffering from the coronavirus effects.
Sh43.5 billion
The same month, Treasury disbursed Sh43.5 billion to counties to clear pending bills up to April 2021, with Mr Yatani telling governors to prioritise the payment because the State has an “important obligation” to the private sector, so as to spur economic activity at the county level as part of its ongoing Economic Recovery Programme.
However, some devolved units are yet to honour the national government’s directive, leaving the suppliers in debts.
Mr Njukia says he has unsuccessfully “begged” for his payment, including making calls and sending messages to the governor that have not been answered.
Officials in the respective departments were not willing to give an official communication to explain the delay even though the businessman says his payment was verified.
Efforts to get a comment from Kiambu Governor James Nyoro on the matter were not successful as he neither picked our calls nor responded to text messages.
