Ethiopian Business Review

MoUDC Put to Work Amended Directive

Ministry of Urban Development and Construction (MUDC) has put to work amended Directive for the Registration of Construction Professionals and Contractors effective as of July, 2013. The Amended Directive demands construction professionals and contractors to upgrade their capacities in terms of capital, equipment and human resource.

The capital requirement for those in grade 1 has increased to above ETB210 million for Building Contractors (BC) and to above 300 million for Road Contractors (RC), while General Contractors (GC) are required to present a registration capital of above ETB350 million.

The small scale contractors in grade 10 also have new requirements to fulfil based on the Amended Directive. BCs in grade 10 will need to have a registration capital of ETB1 million while RCs of the same grade must present ETB1.5 million from now onwards. And GCs in the last grade are also required to present ETB1.8 million upon registration.

The new Amended Directive also requires contractors to upgrade their human and machinery resources.  First grade GCs, for example, need five heavy, three intermediate and three light machineries, according to the newly Amended Directive. This equipment requirement is of course flexible.

“All contractors may replace 50Pct of their equipment requirement by similar sized equipment of similar nature as long as the total capacity is matched,” reads the Directive.

“The new directive gives a grace period which is good news,” says Solomon Gizaw, general manager of Construction Contractors Association of Ethiopia (CCAE). It also allows contractors to use alternative machineries for some time. “It will however create a financial constraint for contractors,” Solomon said. Contractors are compelled to put a lot of finance in capitalizing their resources which leaves them with limited working capitals.    

For suppliers of machineries in the country the Amended Directive is a good news. “It will help the general development efforts by awakening the business of construction materials supply,” said Ephrem Abera, sales and marketing manager of Great Land Motors and Engineering, construction materials importer.

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