Contractors must improve financial management- EBA

Attendees of the workshop by the Construction Industry Council (CIC).

By Bahle Gama

Eswatini Bankers Association (EBA) CEO Zakhele Lukhele has advised contractors, especially small ones, to improve their financial management.

He said they can do this by ensuring that funds are not diverted from projects for an unrelated use, further accepting valid and fair contracts, and always keeping their banks informed of any problems and delays.

Lukhele was responding to a question on what needs to be improved for contractors to have smooth-sailing access to funds from financial institutions.

This was in relation to grievances made by contractors in terms of accessing financial assistance from the respective institutions in the country, both bank and non-bank.

In a workshop by the Construction Industry Council (CIC) held on March 30 at Happy Valley, contractors and financial institutions in the country discussed challenges encountered by contractors in terms of accessing finances. It was disclosed that about 93 per cent of contractors were unaware of the credit guarantee scheme and needed to be sensitized and make use of it.


This was based on several factors including the documentation process which contractors deem to be time-consuming, credit risks, and security problems.

The EBA CEO stated that in the discussion it was clear that many aspects within the construction industry need to be improved that are not the fault of the banks but affect the relationship between the bank and the customer which in this case is the contractor.

“The banks cannot help where the contractor cannot perform according to the contract and faces non-payment, or accepts a substandard contract in desperation for work, or faces delayed payments from the project sponsor. We are glad that the CIC intimated commitment towards improving the plight of the contractors in some difficulties,” he said.

Read More: Contractors against rescinding of ECA suspension

He added that contractors needed to also be aware that the lending in itself is a contractual process with documentation which are part and parcel with the contract and regulatory obligations and the documentation requested by the banks is normally available with registered businesses and personal information of the business owners.

During the session, FINCORP Business Development Support Manager Mancoba Mazibuko disclosed that lifestyle is a stumbling block for most contractors who needed to borrow money from financial institutions, and this is in the sense that once they have acquired a tender, they misuse the funds resulting in debts.

Capacity Building

“We have actually learned that a lot of businesspeople cannot draw a salary, they just spend as and when, then that causes problems. And you find that there is borrowing from different financial institutions including loan sharks and different banks, at the same time,” he said.

In the process, they end up accumulating more debts and are forced to borrow from different sectors at once, resulting in a bad record and thus affecting the running of their businesses. He further stated that he hoped the capacity building proposed would come in handy because a lot of the issues needed tending to, especially those that are administrative like documentation.

“Which are things we should not even be talking about, because when you are in business, they are part and parcel,” he added.

Bongani Lukhele from the Eswatini Contractors Association did not dispute Mazibuko’s statements and stated that contractors were indeed having a lifestyle crisis in that they found themselves spending funds for projects for personal use. At the end of the day, he said contractors have lives and there are expectations from a society that they (contractors) are somehow forced to succumb to.

“They (society) just know that you own a construction company and expect you to drive a posh car and own an out-of-this-world home. One then finds themselves pressured by these expectations and end up misusing funds trying to live up to them,” he said.


The contractor extended gratitude towards the CIC and mentioned that they will sit down and find means to close these gaps. In a presentation, the CIC stated that since the financial institutions did not fully understand the financial needs of the construction industry, recommendations had been made for a successful financial breakthrough.

Read More: No purchase order, No payment from the government

One of the major recommendations was establishing a construction fund where contractors can contribute a certain portion of the money generated from projects done and borrow at a reasonable rate.

CIC Acting CEO Machawe Mnisi stated that the fund could also be used as a security for ease of access to other financial institutions. He further stated that the government needed to enact a regulatory framework that will enable payment within 30 days.

“Government also needs to enforce laws that will stop local contractors or project owners from awarding jobs and tenders to foreign companies which can be carried out by local contractors,” he said.

He added that funding should be made available for renting out machinery for projects and “there should be an addressing of financial needs through group financing and implementing of advance payments from project owners.”

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *