DELAYED PAYMENTS BY KENYA GOVERNMENT MAY SEE TRAVEL AGENTS BARRED BY IATA
(Posted 01st November 2013)
Some of Kenya’s leading travel agencies are in reported trouble with IATA and the Kenyan BSP over alleged failure to fully remit their outstanding ticket sales, which by contract are due every month by the 17th.
At least one source, wishing understandably to remain unnamed, has confirmed that getting money out of government right now is a growing nightmare, as ministries claim to be underfunded and yet the Cabinet Secretary for the Treasury continues full mouthed statements that his ministry allocates sufficient funds to the line ministries which in turn are responsible to pay for services they source from the private sector. ‘Getting a government account is always a big thing, they have a lot of travel business and some ministries have their staff travel more often than others. So if you land a big account, that joy can be shortlived when they start slowing down with payments. We as agents must pay BSP on time and if we don’t they issue warnings which can ultimately result in an agency being cited, suspended or even kicked out of the clearing process. When you need several staff doing nothing else but chase our money, the pro and con start drifting apart. If we have to pre-finance those payments with bank overdrafts to meet deadlines, this can wipe out the entire profit for that account because interest rates for such overdrafts are a bit high. So if that happens for say two months and we still have no money, our bottom line starts to drop. Revenues and meeting sales targets then become a futile race if there is no profit left to pay staff, overheads and all. Some agencies have boosted their capital base to be in a position to pay perhaps for as long as 3 months business but there is a limit. Government should behave like any other client but I guess with the new media laws I cannot even tweet my disgust or see a story written in the papers for fear of being charged and jailed for causing disaffection for government, and yet it is the truth. And to be honest, at times I have a feeling that they expect a kickback to release our money and otherwise sit on the payment vouchers. But if I say that loud when that bill has become law, I go to jail instead of those asking for chai’.
Other agencies were reluctant to discuss the emerging media reports that as many as a dozen of them could be in greater or lesser trouble and it remains to be seen if any intervention by KATA, the Kenya Association of Travel Agents will bear fruits to mitigate any default on current dues and give the concerned agencies a breathing space.
That however may not go down well with other accredited agencies who pay in time, all the time, as they will likely blame those in default for having walked into the trap with eyes wide open and now have to pay the price for putting revenue growth before profitability and collectability of dues from ticket sales. Expect a twist in the tail of this story and watch this space for future updates.