EDITORIAL: Stop late payment culture

The government should commit itself to paying contractors on time.
The government should commit itself to paying contractors on time. PHOTO/FILE
Local contractors are among those who feel frustrated at the late payment culture that is rife in this country.

Banks too are frustrated and the chain of disappointment stretches all the way to the construction site, where casual labourers stay all day, toiling for bread and butter.

Contractors are frustrated because the government does not pay them on time, banks are foiled because contractors do not service their loans and workers are disappointed because their wages are unreasonably delayed.

Delayed payment by government to contractors has been cited as a major reason as to why contractors, especially those involved in road projects, are not able to service their loans.

READ: Loan defaults plague Kenya’s construction industry

Indeed, the construction industry’s bad loans stood at Sh117.2 billion as at the end of March this year up from Sh70.3 billion two years ago.

This has seen banks shying away from lending to the construction sector in effort to cushion themselves from bad loans provisions. This is quite unfortunate especially coming at a time when the government is embarking on a massive road construction project that requires heavy funding from commercial banks.

The government should commit itself to paying contractors on time to enable them to meet their financial obligations. This will shield the contractors against the imminent long-term reputation damage.

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