Tanzania: NMB Offers Bid Guarantee to 500 Contractors

NMB Bank has dished out over 500 bid guarantees worth billions of money to local contractors as its contribution to make them undertake effectively the ...

awarded tenders.

A deliberate move comes as a response to an outcry by the local medium and small sized contractors who have reported failing to undertake strategic projects implemented by the government for lack of sound financial muscle.

The NMB Chief of Retail Banking, Filbert Mponzi said during a special symposium that brought together over 300 contractors from all over the Lake Zone in Mwanza over the weekend that the bank initiative was a response to the call by President John Magufuli on the matter.

"We are honouring the challenge put on us by President Magufuli who asked the banking sector to support local contractors by giving guarantees and so far we have supported over 500 of them countrywide," he said.

He said under the arrangement, NMB has dished out loans equal to 50 per cent of the total work value in advance which has brought huge impact to many contractors with liquidity challenges.

Mr Mponzi was confident NMB will keep on supporting local contractors on a number of aspects namely providing insurance covers and lending at an affordable interest rates.

However, he challenged them to be honest in paying back the loans as per agreed terms and assured of favourable interest rate for the contractors who will not abuse the lending contracts.

The symposium was also attended by the Permanent Secretary in the Ministry of Works, Transport and Communication, Eliud Mwakalinga who thanked NMB for a number of innovations targeting local contractors.

Mr Mwakalinga posed a challenge to the local contractors to remain competitive apart from their inability to compete with foreign companies by employing professional engineers.

"We have carried out study which shows a number of local contractors failing to maintain professional engineers and end up employing graduate engineers and even technicians who somehow lack essential skills in undertaking quality works," he said.

The PS said the government had been carefully reviewing factors behind many local companies failing to win major tenders and hinted a number of measures to address the situation.

He mentioned one of them as emanating from a meeting with the World Bank officials in his office recently where they deliberated on key issues including reviewing some financial conditions in order to give local companies more opportunities in the mushrooming construction industry.

On his side, the Chairman of the Contractors Association for Mwanza Region Eng Oscar Munisi said apart from the banks supporting local members financially, contractors should conduct self-evaluation before blaming the government for failing to deliver.

He admitted there were some internal challenges that must be solved and remained hopeful the Contractors Registration Board (CRB) was working on them particularly uncovering unethical contractors tarnishing the image of the noble profession.

Some contractors raised an issue over force account implemented by the government that has robbed them many building projects, but they were grateful to the Tanzania Rural and Urban Road Agency (TARURA) and the Tanzania Road Agency (TANROADS) for offering them civil works.

A participant Mr Riziki Cyprian said the NMB Bank support has given them strengths in undertaking some civil works offered by the two agencies calling for other banks to emulate the move.