President Yoweri Kaguta Museveni has directed that local construction companies don’t need guarantees from banks in order to execute their work.
In a letter dated 23rd September, 2024, President Museveni informed the Minister of Finance, Planning and Economic Development, Hon. Matia Kasaija that he was recently petitioned by SMS Construction Company, an Indigenous Ugandan construction company executing major projects for both government and private, which narrated to him the process of obtaining guarantees for performance and advance payments from commercial banks for the execution of the projects.
“I find this process extortionist, anti-development and is against the ideologies of the NRM government. They have for instance staked all their properties to the banks in order to secure these guarantees. On top of that, the advance payment guarantees are 100 percent cash covered,” he said.
According to the President, this practice is prohibiting fair competition and disadvantages some able contractors to execute their works.
“With local construction companies, there should be no guarantees from banks. It is enough to assess that the company is able to do the work. Also give them time lines within which to do the work. If they do not perform, do not pay them and after some set time, terminate the contract. However do not encumber our people with extra costs of bank guarantees etc,” President Museveni directed.
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