By CATHERINE NYIRENDA –

THE banking sector has reservations about giving loan facilities to some local contractors due to uncertainties in their capacity to handle road projects, Finance Bank managing director Barkat Ali has said.
Mr Ali said despite the fact that the employer was Government and such a payment was assured, failure to perform on a contract might result in guarantee being recalled and loan facility not being paid.
He said this when he appeared before the Parliamentary Committee on Community, Transport, Works and Supply chaired by Moomba MP Vitalis Mooya to give a presentation of the local participation of the construction industry in Zambia.
“The bank acknowledges that the employer is Government as such payment is assured as long as the contractor successfully performs on the contract, failure to perform on a contract results in guarantees being recalled by employer and facility not being settled,” Mr Ali said.
He, however, told the Committee that the Bank credit finance imitative was at K300 million and that it had an outstanding financing loan to local contractors standing at K114. 994 million.
The Bank had given 90 per cent of the facility to road construction while the balance was to other construction projects.
He said the contract awarded call for a performance bond or an advance payment guarantee in favour of the employer.
Inadequate collateral was also a challenge for local contractors to secure credit facilities as well as late receipt of applications for credit facilities.
Finance Bank was exploring the possibility of bringing on board insurance companies to share the risk.
The bank was also working on enhancing awareness to contractors on timely submission of applications.
He reiterated the bank’s commitment to continuing this partnership to support Government initiative to empower local contractors.