Kampala — THE Government will start accepting insurance bonds from contractors instead of bank guarantees, works state minister John Byabagambi has said.

Byabagambi said the insurance bonds would be accepted because most local contractors lack money to stake on bank guarantees required before they are given government contracts.

"Before getting government contracts, contractors were required to get bank guarantees to ensure they have enough money to complete the work on time. This time we shall want insurance bonds," he said recently.

Byabagambi said this during Gold Star Insurance Company's contractors meeting at Kabira Country Club in Bukoto, Kampala.

An insurance bond (investment bond) is a single premium life assurance policy for investment.

"I will pursue this to ensure that my ministry gets confidence in the insurance industry," he said.

Byabagambi said insurance companies can play an important role of guaranteeing bank loans of contractors and giving a guarantee on their ability to complete work.

He said, "Our duty will be to set up the construction policy, standards and regulating the industry."

Byabagambi said that in a bid to encourage the move, the Government had set up guarantee funds to help some local companies who can do the job but lack funds.

He said the funds would be re-insured by local insurance companies.

Byabagambi said there are many unique opportunities for insurance companies in the construction industry, which is currently growing at a high rate.