Government should pay local contractors and suppliers on time for them to be viable and competitive among their foreign counterparts, says the National Empowerment Forum (NEF).
NEF executive director Edgar Siakachoma told the Daily Nation yesterday that most of the local contractors and suppliers were languishing in financial difficulties as a result of non-payment of their dues for the works they did.
Mr. Siakachoma observed that most local contractors and suppliers had the potential to do well if they were paid their dues in full and on time in order to continue rendering their service in the industry but that most of them had failed to expand as a result of failure by Government to pay them.
He also observed that the depreciation of the Kwacha had taken a toll on the progress of most businesses as the cost of production had risen sharply, making it difficult for most of the players in the industry to fail to cope with the economic downturn.
“Many contractors and suppliers, especially the medium and small scale are in a worse position now than they were three to four years ago because of of dues erratic and non-payment by the Government,” Mr. Siakachoma said.
He explained that most players have been kicked out of the industry as they were forced to pay heavily to financial lending institutions through loss of collateral after failing to pay as agreed.
“Most contractors are as indebted as their main client, (the Zambian Government) and most of them have either lost their assets which they have pledged as collateral to financial institutions or have indeed haplessly watched their capital base shrink due to erratic and or delayed payments compounded by the unprecedented depreciation of the kwacha and the generally high cost of doing business,” Mr. Siakachoma said.
He said the situation had become worse in the past four years where most developmental projects which were initiated by Government were done on credit basis which disadvantaged those who offered the service.
Mr. Siakachoma observed that the economic environment in Zambia was making it difficult for small businesses.
It is an undisputed fact that Government is the biggest client of Zambian business and we, therefore, want to urge them to be considerate towards the local contractors and suppliers,” he said.
Mr. Siakachoma said it was unfair for Government to perpetually delay payments for goods and services while boasting about the visible benefits of the same.
“It is very inconsiderate and insensitive of government to subject local small and medium scale businesses to such harsh business conditions that they are turned into creditors of Government and at no interest charge at all,” he said.