Pay local contractors

Last week, local contractors said the Federal Government still owes them N1.97 trillion.  The National Contractors Association that gave these figures while speaking with journalists in Abuja, said the Federal Government, the states and local councils owe a combined total of N2.4 trillion. Its national chairman, Onuche Okoh, condemned the suffering to which their members […]

Last week, local contractors said the Federal Government still owes them N1.97 trillion.  The National Contractors Association that gave these figures while speaking with journalists in Abuja, said the Federal Government, the states and local councils owe a combined total of N2.4 trillion.
Its national chairman, Onuche Okoh, condemned the suffering to which their members are subjected to on account of governments’ failure to pay them.  Already, the association, according to the chairman, has lost 579 members to heart attacks.
 “The association wish to passionately appeal to the President to quickly take a look at the issue of the welfare of contractors over the years especially on contracts that have been executed,” Okoh said.
We see many reasons why the situation has become this messy.  Payment dates are not stipulated by government when awarding contracts. The contractor sees the money whenever the bureaucracy pleases. This impedes tracking and introduces all forms of inconveniences to the contractor; especially because contractors usually take loans from banks to execute the projects.  By the time payment is made, the interest on the loan might have compounded beyond control and what the contractor is able to pay. Some of the debts eventually become bad loans. It is for this reason that many banks balk at lending to government contractors.
Another reason is the way contracts and supplies to government agencies are structured.  Even before contracts are awarded, all manners of interests are factored in.  And immediately the mobilization payment is made, individuals within the government are paid from it – sometimes up to 15%.  This becomes a disincentive for officials to track payment due to contractors because they have already benefitted from the project – and move on to another project to wreak havoc – leaving government with the debt burden, and many times, uncompleted projects.
Yet, contracts are agreements, which are supposed to be honoured.  And there is no honour in a payment which is no longer useful to the contractor and which might actually become the source of a huge burden to the contractor – as it can lead to unbearable debts and untimely deaths.
It is commendable that the Federal Government and even some state governments have continued with the projects of the previous administrations.  In some of the projects, savings were made, others attracted more cost because ongoing projects were stopped for renegotiations which led to variations and increases due to inflation and remobilization.
However, now that we have a government which promises change, we believe that the entire process should be reworked, processes followed and laws enforced. By so doing, payment of local contractors would be less of a pain.  Also, the government should be faithful to the Fiscal Responsibility Act, including making funds available before the commencement of projects.  It is also important that all payments should be made within the accounting year.
We urge the governments at all levels to endeavour to pay local contractors as soon as they are able to do so.  When that is done, we may get some relief from the current recession which has enveloped us, as the money paid to the local contractors is likely to circulate within Nigeria.  It is disturbing that money is annually budgeted to pay debts owed to foreign creditors, yet the local contractors do not receive similar attention.  It makes no sense that we should favour others over our own.  We must encourage our businesses by empowering them with prompt payments, so that they can in turn stimulate the economy by providing jobs.