Contactors seek credit guarantees from govt

October 9, 2013
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Muhia said the government should set aside 10 percent of the total development finances for the year to be placed in a guarantee scheme to enable contractors access credit/OJWANG JOE
Muhia said the government should set aside 10 percent of the total development finances for the year to be placed in a guarantee scheme to enable contractors access credit/OJWANG JOE
KISUMU, Kenya, Oct 9 – The Kenya Federation of Masters Builders has petitioned the government to set up a guarantee credit scheme to assist small and medium construction enterprises in the country.

The federation’s national chairman Moses Muhia who spoke on Wednesday in Kisumu said conditions in the construction industry remain challenging and such innovative approaches are needed to lift up small firms that struggle to access credit.

Muhia said the government should set aside 10 percent of the total development finances for the year to be placed in a guarantee scheme to enable contractors access credit.

“This money can be accessed quickly by the contractors; they don’t have to go to the bank because banks fear that contractors may not be able to pay. They do not understand the business of procurement between government and contractors,” he said.

He said the scheme could be managed by people who understand the industry and are able to regulate and follow up the management of the funds.

Muhia said that small construction firms have been unable to perform their duties perfectly due to lack of funds as a result of stringent measures by banks.

“With a scheme in place, small construction firms will be able to finish up their work that always stalls due to lack of funds,” he said.

Muhia further noted that local contractors are not under threat from the international contractors who have taken up construction of major roads in the country, saying the National Construction Authority regulations are stringent.

“All foreign contractors coming to Kenya must only do projects that are above Sh1 billion for roads and Sh500 million for buildings, they cannot do projects below this because we have capacity within,” he said.

He said once in the country they must sub-contract and do a joint venture with local contractors for not less than 40 percent and this must be documented in the original tender document.

“Local contractors are not against international constructors but the government has a duty to put the local contractors at the same level of support as the foreigners to be able to grow the industry in the country,” he said.

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