NCA seeks Treasury’s help to recover Sh1.7b debt from developers
National Construction Authority (NCA) will seek help from Treasury to recover fees amounting to Sh1.7 billion from real estate developers which accrued before the scrapping of the construction levy in 2017.
It said Friday that involving the exchequer in the matter, would fast-track the process, presumably sensing it might be problematic to recover the said amount most of which is owed by State agencies and Parastatals.
The development comes barely a month after an announcement by the firm which was looking to hire debt collectors to recover the amount that was applicable on all construction projects with a contract value exceeding Sh5 million.
“We may be forced to involve the National Treasury into this matter owing to the stakes involved even though the process of hiring debt collecting firms to help us in the recovery of the debt in question, is still ongoing,” said a senior representative from the agency.
A Cabinet memo of November 2016 scrapped construction levies charged by State agencies and counties to lower project costs, after developers had complained of high associated costs of putting up construction projects – arguing that they have been a barrier to investments. Regulations providing for the obligation of the construction levy at the rate of 0.5 per cent of the contract value by the authority came into force in July 2014, two years before they were scrapped and ceased being operational in December 2016, the same year NCA was formulated.
Officials from the agency had spoken against the scrapping of its own levies, arguing that the fees account for more than 70 per cent of the authority’s revenue, hence its removal would hurt its operations.
Activities the NCA levy was supporting include strategic objectives such as training, research, and sustainability. It is now understood to want more financial allocation from Treasury if it is to effectively carry out its mandate.
Key among concerns raised by the authority is the need to ratify the Building Code – whose existence, the NCA’s Chief executive Maurice Akech said, would give the institution an authoritative voice addressing the sector’s challenges such as collapse of buildings.
“The current prosecution law allows for 3 years jail term and Sh1 Million penalty for such offenders, we can only do much based on our mandate,” noted Eng Akech while addressing journalists.
In its previous research, Research on Failure and Collapse of Buildings in the Construction Industry in Kenya, NCA noted with concern that sloppiness involved in approvals and certification of such projects, are some of the reasons the industry continues to experience problems.