Contractors want the Central Bank of Kenya (CBK) backed loan facility raised to about Sh1 million to enable them fulfill small-ticket contracts.
Kenya Federation of Master Builders (KFMB) secretary Thiaka Muchai said while the CBK-backed facility was welcome, the minimum Sh30,000 to a maximum of Sh250,000 unsecured loan—offered via mobile apps by five Kenyan banks—was too little to undertake public contracts.
“Even a classroom or a public toilet block costs more than this and for such a facility to make sense, it should be increased to meaningful amounts to enable us meet implementation costs for projects given to us by constituency development committees, county governments and other public entities,” he said.
On Monday CBK Governor Patrick Njoroge unveiled the Stawi product where five banks—NIC #ticker:NIC, KCB #ticker:KCB, DTB #ticker:DTK, CBA and Co-op Bank #ticker:COOP—agreed to give unsecured loans to small businesses repayable within a year at nine percent interest.
Other charges on the Stawi product include a facility fee of four percent, 0.7 percent insurance cost and an excise duty of 20 percent of the facility fee. Where good borrowers will benefit from lower interest-rate loans.
Mr Muchai said with the loans capped at Sh250,000, local contractors can bid for small-ticket jobs within the counties since they lacked the finances needed to implement the projects.
KFMB chairman Maurice Awiti called for introduction of new loan products that understand contractors’ woes where the decision to dish out a loan should be based on the feasibility study of the planned project that should become a collateral and not financial ability of a contractor.