How long credit period is sabotaging Unga subsidy – Business Daily
Packets of maize flour at a Nyeri supermarket on March 16, 2022. PHOTO | JOSEPH KANYI | NMG
The government has asked retail chains to cut down the credit period on maize flour from 45 days to two days after it emerged that the long repayment period was threatening to sabotage the current subsidy.
This is after it emerged that millers were shying from selling their flour to supermarkets over longer credit period, leading to a shortage of the Sh100 commodity in retail outlets.
This has forced the government to ask asking retailers to cut the time that they take to pay millers from 30-45 days to at least two days in order to increase the supply of flour on the shelves and make it accessible to consumers.
Agriculture Principal Secretary Francis Owino said the shortage in supermarkets was as a result of millers preferring to sell their merchandise to wholesalers who are buying in cash.
“We have told millers to agree with the retailers on the way forward in regard to the payment time. Government is spaying them in 24 hours and retailers should also cut the credit period to at least two days,” said Dr Owino.
Retail Trade Association of Kenya (Retrak) said on Monday that they have established talks with the millers to reach an agreement on the suppliers’ agreement on flour.
“We have had a discussion over Unga to see if retailers can agree to lower the credit period from the current 30-45 days within this subsidy period,” said the chief executive officer of Retrak Wambui Mbarire.
Ms Mbarire said the credit period will only be lowered on flour, upon the agreement but other goods will retail with the stipulated time in the suppliers’ agreement.
She said that millers have been selling flour to general trade people, who pay in cash as opposed to retailers who would pay at a later date.
The government said yesterday that it had released Sh160 million to millers out of the invoice of Sh325 that had been sent to them by the processors.
Retailers had last week raised concerns over a shortage in supply of the Sh100 flour citing unstable supplies since the subsidy programme was rolled out.
Naivas supermarket said last week that they have only been getting 25 percent daily of their total needs from millers.
“We are not getting enough stocks and that is what is creating a shortage in some of our branches,” Mr Kimani told the Business Daily.
Supermarkets have been going without the subsidy flour for the last couple of days on the back of supply hitches, which had earlier been blamed on panic buying.
The State two weeks ago inked a deal with millers to cut the price of maize flour to Sh100 under a Treasury-backed subsidy, in Sh8 billion programme.