New levy to see road contractors part with millions

Investors who have embarked on new construction projects in the past three months would part with millions of shillings as the regulator enforces a new levy.

Developers will be required to pay National Construction Authority (NCA) 0.5 per cent of the total value of the contract backdated to June 6, the regulator noted in a newspaper advert on Friday.

“This is in relation to all construction projects in buildings, roads, water works, electrical works and other related works that require a contractor,” NCA executive director Daniel Manduku said.

The levy is to be paid by all project owners including ministries, State corporations, NGOs, private firms, social groups and individuals, said Mr Manduku.

According to NCA, all developers are required to register their projects with the authority within 30 days of awarding a contract. “No construction works shall be commenced without the compliance certificate from the authority,” Mr Manduku added.

NCA has powers to suspend, cancel or revoke the registration of a contractor who executes works that has not been paid for.

The levy would push up the cost of building houses and slow growth in the sector but NCA said smaller contractors will benefit from cheap loans as a result of the fees.

It targets to raise Sh1.7 billion annually for the revolving fund to offer loans with interest rates between four and six per cent through commercial banks.