NCIC launches retention fund
The National Construction Industry Council (NCIC) has introduced a construction industry retention fund which would see a percentage of the amount certified as due to a contractor on an interim certificate deducted and retained by the client.
The purpose of retention is to ensure that the contractor properly completes the activities required of them under the contract.
It would ensure that the retention money is not placed at risk by clients
The fund is regulated by the NCIC retention funds regulations which were gazetted in April 2018 under Government Notice number 14 of 2018.
The main aim of the regulations is to promote contractors, while safeguarding the interests of clients; and shall apply to all construction clients including government departments, parastatals, private sector, non-governmental organisations and individuals.
NCIC Chief Executive Officer, Linda Phiri, said that establishment of the fund is ideal to minimise the risk of loss of value for the money if it is idle.
“We have been receiving a lot of complaints and been managing disputes. Some claims suggest that clients were misusing the money that was held on behalf of the contractors. So we decided to come up with a solution.
“We have also been having challenges in uplifting the capacity and status of local contractors where they are not able to meet the requirements alluding to working capital, bank guarantees and bonds and then for us we needed to come up with a solution which is the retention fund,” Phiri said.
Principal Secretary in the Ministry of Transport and Public Works, Francis Chinsinga, concurred with Phiri, stressing that the fund would go a long way in transforming the construction industry in Malawi.
“This arrangement is welcome because they have laws and they are using professional institutions like banks to manage the funds. So, there would be no excuses, whatsoever, from clients,” Chinsinga said.