Daker Abdellah, member of the board of directors of the Egyptian Federation for Construction and Building Contractors (EFCBC), called upon banks to review and reconsider the position of construction companies that have been seeking letters of guarantee, highlighting the necessity of considering the companies’ memberships in the EFCBC.
Abdellah explained that the past period witnessed many companies relying on subcontractors that have financial and liquidity resources to assist with the projects, regardless of the experiences these companies may have and whether or not they were listed on the EFCBC lists.
He added that most of the banks do not bother to review the companies’ memberships in the EFCBC, as they only focus on the allocation orders and the application for coverage.
Moreover, he said that the recent volatile market conditions, the hike of input costs, and the unproportioned costs to fees may lead these companies to default and force them to suspend projects, which would oblige banks to compensate government entities that awarded the companies projects.
He added that most of those companies do not possess the expertise and skills for dealing with the current situation, which will contribute to damaging banks and stir problems between banks and construction companies.
According to Abdellah, the situation may cause harm to serious construction companies and make banks reluctant in granting financing in the coming periods, which would negatively affect the sector, in addition to the rates of implementation of current and future major projects.
He explained that the state is betting on the construction sector to achieve high growth rates in the current period, especially considering their role in employment and path towards economic and social development.