•Local contractors have accused the government of delayed release of funds for projects, preferring foreigners.
• Foreign contractors accused of breaking the law by taking up multiple projects, while they are allowed to take up only one at a time.
Image: NJERI MBUGUA
Contractors say government projects are stalling due to delayed payment and diversion of funds.
They also said that despite Kenya having the technology and professionals to handle mega projects, the majority of jobs are awarded to foreign contractors.
Too much politics surrounds payment to local contractors, said Nashon Okowa, chairman of the Association of Construction Managers of Kenya. He was addressing a seminar in Nairobi on Tuesday.
About 100 contractors discussed barriers to their participation in mega projects.
"Money is the biggest problem local contractors are facing. The moment you interfere with the cash flow of a contractor, they are done," Okowa said.
He also said foreign contractors had been breaking the law by taking up multiple projects, while they are legally allowed to take up only one.
"Foreign contractors are allowed to register at category one and they should follow the regulation that demands they conduct a single project and a go," he said.
The contractors expressed frustrations over banks' reluctance to give them loans for the projects.
Okowa proposed establishing a bank that would facilitate all financing for local contractors.
Isaac Inanga, the head of construction and project management at KCB, said banks look at the cash flows when determining whether to issue a loan or not.
He was emphatic that when it came to loan repayments, securities were not as important as the cash flows.
"The bank will look at your cash flow history so we are able to ascertain that you will repay the loan," Inanga said.
He added that banks are reluctant to accept securities in the form of property, land or project contracts because they are not sure they will be able to recoup their money.
Speaking to the Star on condition of anonymity, a local contractor said her firm had resorted to using ongoing projects as securities to the banks.
"We simply tell them to look at the money coming in from those projects and use that as security for loans," she said.
The contractor stated that the government's snail's pace in releasing money for the projects has frustrated contractors, who end up digging into their own pockets.
"Most contracts state that the contractor should be paid after 30 days but the government does not respect that timeline," she said.
"There are contractors who have gone out of business because they used all their money to finance a project contracted by the government."
She added that payment of money depends on the type of contract signed with the client.
"Some contracts allow the payment of a deposit before any work begins while others need the implementation to a certain point before any payment can be issued."
She said some projects have failed because they were initiated as political projects, especially during election periods.
"So many projects begin and stall especially a year to the election, while other government officials allocate themselves percentages of money before the project is initiated and then fail to follow up," she said.
The contractors committed to working closely with professional associations to develop a five-year capacity building programme to increase their competitiveness.