Uganda: Local contractors get financial management tips

Local contractors should improve their financial management skills if they are to access financial services with better success, a top banker has advised.

“Contractors should know what information to provide to banks to make a business case for the bank to provide them with credit,” said Greg Barclay, the head of business banking at Stanbic Bank.

“If you do not have a history of financial information and sound financial management, banks will not lend you money.”

Barclay made the remarks at the launch of collaboration between CAT Financial Services and Stanbic Bank in Kampala last week.

He said the partnership, which will see CAT Financial Services provide services for Mantrac dealership in Uganda, is aimed at benefiting the local construction industry.

“We will look at how best to work with local contractors for them to acquire equipment. If you are a small firm, you can buy used equipment that can provide the same capability at a lower cost,” he said.

There is a capacity mismatch between local contractors and their international competitors. The gulf has seen international players scoop the big money projects, while the locals settle for the less lucrative road maintenance works.

In a related development, Housing Finance Bank last week became the latest financial institution to sign up with the Creating Opportunities for Sustainable Spending on Roads (CrossRoads) on the Construction Guarantee Fund (CGF) facility.

The guarantee fund is a pool of money that banks can apply to when providing bonds or guarantees to road contractors. In the event that a contractor performs below expectation, the CGF underwrites a percentage of any guarantees claimed by the employer from the bank.

The fund is intended to boost the road construction and maintenance sector.

At the signing of the agreement, Housing Finance Bank managing director Nicholas Okwir said the development of the roads is important for the success of the housing sector.

Alex Mugova, the CrossRoads market systems development specialist, said it is critical that tangible and sustainable ways of financing local contractors are made to improve capacity.

By Billy Rwothungeyo, The Standard

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