|
|
Tanzania: Lack of Cash Hits Building Sector Hard
 |
|
|||||||||
|
||||||||||
The Citizen (Dar es Salaam)
9 May 2008
Posted to the web 9 May 2008
Kagashe Beatus
The building, construction and real estate industry in the country lags behind in attracting finances from the banking sector.
Its stakeholders yesterday blamed the trend for poor infrastructural facilities in most parts of the country.
However, members of the Contractors Registration Board (CRB) also cited several weaknesses among members as reasons that kept off potential financiers.
Officiating a meeting of contractors and financial institutions yesterday, the Governor of the Bank of Tanzania (BoT), Professor Benno Ndulu, said many small contractors cannot afford imposed deposits of bonds and guarantees.
He said by December last year the sector received only 5.3 per cent of the total credit extended by commercial banks compared to 17.2 per cent for trade and 16.2 per cent for personal loans.
"Many local contractors are small and lack entrepreneurial skills to enable them manage their business to compete with foreign firms," said Prof Ndulu.
He explained that while local contractors constituted 97 per cent of all contractors in the country, they only got 30 per cent of the construction business while the remaining 70 per cent is undertaken by foreign firms.
On the high cost of borrowing from banks, Prof Ndulu said the BoT was taking direct measures to reduce lending interest rates which were still very high.
He, however, said the government had managed to cut by almost a half the interests on its Treasury bills and bonds, that would in turn make banks lend to the private sector.
The BoT governor said the government has prepared a bill to amend registrations that were hindering the development of mortgage finance in the country.
The CRB board chairman, Mr Boniface Muhegi, said despite contributing an average of 5.7 per cent to the country's GDP, they still suffered limited access to capital for procurement of equipment, access to bridge financing, bonds and guarantees.
He said financial institutions argued that contractors lacked financial management skills and mismanaged funds, something that results in them being at high risk and compelled to unfavorable terms and conditions.
|
The board, he said, established the Contractors Assistance Fund in collaboration with the CRDB Bank to provide access to members, but the fund was overwhelmed.
The fund, with an initial capital of Sh300 million, to Sh1.3 billion.
The two-day forum, called 'Seeking collaborative solutions to contractors financial challenges', aimed at finding sustainable solutions to financial predicaments facing contractors.
| |||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Copyright © 2008 The Citizen. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here. | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Make allAfrica.com your home page | RSS Feed | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Top | Site Guide | Who We Are | Advertising | Search | Subscribe | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Questions or Comments? Contact us. Read our Privacy Statement. | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
