Mukawala (Rent mukawala)
It is a contract based on which the bank (contractor) undertakes to perform a service against fees paid by the customer. The fee is usually paid in installments and in Mukawala contract, the bank assumes the performance of a service only.
Steps of a Mukawala sale
1) The customer submits an application expressing the desire to enter into a mukawala transaction to perform a certain job according to specifications and at an expected cost as estimated by the customer.
2) The bank studies the transaction, and having insured the economic feasibility, lays down the conditions and guarantees required for approval.
3) The bank signs the Mukawala contract with the customer undertaking to perform and deliver the job on an agreed timeframe.
4) The bank signs a parallel mukawala contract with a subcontractor who expresses the desire to accomplish the job described in the first mukawala contract with the same specifications and fix the price and time for delivery with the subcontractor.
5) The bank receives the accomplished job form the subcontractor and delivers it to the customer on the agreed timetable.
Areas of Application
Mukawala contract is applied in different jobs and services where the bank is not involved in the materials, such as transportation, harvesting, buildings maintenance or painting and factory machineries and equipments overhaul.