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CRDB collateral-free loans rescue local contractors

CRDB Bank has thrown its weight behind mega infrastructural projects by empowering local suppliers and contractors through offering them collateral-free loans, to speed up completion pace.

The lender, with a capital base of over 790bn/-, wants local suppliers and contractors to fully participate in construction projects financed by the government.

This will also enable locals to bid for big projects as well.

The bank’s Chief Commercial Officer (CCO), Dr Joseph Witts, said that after studying pain points of suppliers and subcontractors, the lender could loan and guarantee them once they produce bid order, letter of credit and invoice discounting.   

“We have recently introduced bridge financing products, specifically tailored to suit suppliers and contractors’ needs with flexible conditions,” Mr Witts said on behalf of the CRDB CEO, Abdulmajid Nsekela during a business meeting with over 400 Standard Gauge Railway and Julius Nyerere Hydropower Project (JNHP), contractors, subcontractors and suppliers.

The CCO said the collateral would be self-secured by contracts namely purchase order financing, contract financing and invoice discounting.

CRDB Bank also offers overdrafts and investment loans to finance the acquisition of construction equipment, vehicles, machines, buses and other assets and other financing facilities such as bid guarantees, advance payment guarantees, performance guarantee, and letter of credit.

“Our credit facilities are granted at attractive rates, shortest turnaround time with flexible conditions to suit suppliers/contractor’s needs,” he said.

The entire bank’s team is focused to work efficiently to meet expectations of all stakeholders, as we embark together on a journey of being a catalyst for infrastructural development in Tanzania.

Though the lender opened doors for all suppliers and subcontractors, the main focus is put on two key mega infrastructure projects namely the JNHP and the SGR.

The bank had issued an overdraft of 20 million US dollars and 88 million US dollars in terms of advance payment and performance guarantee to Yarpi Merkez--the main contractor of SGR.

Also granted the sum of 221 million US dollars as advance and performance bond in support of the Rufiji project main contractor—JV Arab Contractors and Elsewedy Electric. The Contractors Registration Board (CRB), Registrar, Mr Rhoben Nkori said the biggest challenge contractors faced was securing loans without providing collaterals.

“This impedes locals from obtaining major projects, let alone become subcontractors in these projects,” Mr Nkori said at the side-line of the business meeting, yesterday.

He said this will bridge finance gap local contractors were facing, “if CRDB walks the talk.”

Mr Nkori said the lender’s value chain financing was a welcoming gesture and suppliers and contractors’ liberator since working capital is the main obstacle that bars locals from “bidding for big projects.”

Despite representing 90 per cent of all contractors, they only access 20 per cent of total construction projects in the land.

“This non-collateral lending will also enable locals to complete some existing projects on time,” the Registrar said. Kastipharm Ltd Managing Director, Anwar Kachra said CRDB walks the talk since it took him a few days to secure a loan by providing local purchasing order (LPO).

“This is truly a bank that listens…I engaged a number of lenders but none came forward. CRDB visited me and I secured a loan faster,” Mr Kachra, whose company supplies health equipment, said.

The government embraced a Private Public Partnership (PPP), model in implementing these projects, which is the best way of developing and empowering local private sector through joint ventures with large international firms in areas such as subcontracting in civil works, electrical works, and facilities management.

The government is set to construct a pyrethrum ...


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