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900 local contractors receive financial assistance from CAF

2nd January 2013
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900 Local contractors have benefited with financial guarantee provided by the Contractors Assistance Fund (CAF) which has been run by the Contractors Registration Board (CRB) since its establishment, the management has affirmed.

Speaking to this paper in an interview over the weekend, the CRB registrar, Eng Boniface Muhegi, said the guarantee has been provided for the past eleven years.

CAF is a facility set up with the aim of assisting contractors in securing bid bonds and bank guarantees for advance payments from commercial banks.

Up to the moment, the fund which is also known as contractors guarantee is worth over 2.1bn/- from 300m/- registered during its establishment in 2002.

Muhegi attributed the steady growth to adherence to strict financial management rules, which means that they will be able save local contractors from over dependence on commercial banks for project guarantee financing.

Eng. Muhegi, also urged contractors who have already borrowed money for guarantee to return it immediately in order to enable more access.

“They have to work hard, since this is a revolving fund it must be returned to us so as to enable others borrow for their project developments,” he insisted.

Currently eligibility to CAF membership is to contractors registered in classes V-VII or II and III for specialist contractors.

According to the board, the registered contractors who qualify for the guarantee must meet some criteria.

The applicants must be current on their obligations to CRB including payments of their annual subscription fees and submission of annual returns.

The applicant must also indicate the specific contract to which the guarantee is applicable and submit tender conditions and/or signed contract to CRB before a guarantee or Bond can be granted.

According to Muhegi, by empowering local contractors, the government through CRB is actually boosting the local economy by making sure the financial resources paid for the project remain in the country and more important build a team of local skilled experts in managing mega projects.

Statistics shows that at least 80 per cent of road construction projects in Tanzania have been awarded to foreign firms in the past five years.

Despite the amendment to the Public Procurement Act in 2007 which stated that tenders worth up to1bn/- must be awarded to local contractors; there has been a decrease of only10 per cent as 90 per cent of construction work has been awarded to foreign companies.

Tender conditions are easily met by Chinese construction companies because they are heavily subsidized by their government.

Other EAC countries have been fighting similar battles. Contractors in Rwanda are pushing for a 30 per cent share of public construction tenders given to foreign companies.

Kenyan contractors plan to use the window for the review of the procurement law to seek legal protection against unequal competition from established foreign firms. 

 

SOURCE: THE GUARDIAN