Payment Terms Legislation In Kenya

The Prompt Payment Bills of 2020, 2021, and 2022 proposed a framework for interest on the late payment of invoices by national and county government entities. The 2022 Bill passed the Senate and was referred to the National Assembly but has not received presidential assent as of early 2026. The Bill remains pending.

The National Trade Development Bill, 2025 is a draft bill undergoing public consultation (forums concluded February 2026). It proposes a statutory framework for trade regulation including payment terms. The bill has not yet been tabled in Parliament. The 2017 Study on Kenya Retail Trade Sector Prompt Payment recommended limiting terms to 7 days for fresh food and 30–45 days for other suppliers.

The Competition Authority of Kenya (CAK) Retail Trade Code of Practice (Gazette Notice No. 5725, 11 June 2021) under Competition Act s.24A regulates payment between retailers and suppliers. Parties must contractually agree payment terms, payment date, and late payment interest rate. Delaying payment without justification constitutes abuse of buyer power, subject to fines of up to 10% of annual turnover or criminal penalties of up to KES 10 million / 5 years’ imprisonment.

In the absence of contractual agreement, the default statutory interest rate on judgments is 6% per annum under Section 26(2) of the Civil Procedure Act (Cap 21). Courts have discretion to set a different rate where appropriate.