The Challenges Of Indigenous Building Construction Firms In Nigeria

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The Challenges Of Indigenous Building Construction Firms In Nigeria


Abstract


This study was carried out to examine the challenges of indigenous building construction firms in Nigeria: a case study of Kaduna state. Specifically, the study was aimed at determining the effects of government policies and procedures on indigenous; find out the effects of poor financial structure on the indigenous building construction firm; and suggest was of solving the problem facing the indigenous construction firm. The study employed the survey descriptive research design. A total of 133 responses were validated from the survey. From the responses obtained and analysed, the findings revealed that government policies and procedures on indigenous building construction firms affect Building firms positively. Furthermore, there is a strong relationship between financial base and the challenges faced by indigenous building construction firms. The study therefore recommend a new innovation in the Government decision to participate in the construction industry by forming Joint construction companies with some expatriate firms. The original intention which presumably is to try to reduce cost, is a good one.


Chapter One


Introduction

1.1 Background of the Study

According to business dictionary, an online dictionary, “the construction industry is that sector of the national economic engaged in preparation of land and construction, alternation and repair of building, structures and other real properties.

The industry is engaged in many types of building and civil engineering jobs. These include jobs in carpentry, road construction, bridge development and home design. The industry occupies a very important position in the whole world because it is responsible for creating infrastructures for cities, towns, and countries. Oyefeko (1991) as cited in Building construction industry …(2014). National housing Policy (NHP 2006) as in Building construction industry (2014) also confirmed this assertion when it revealed that the industry has an output of 11% Gross domestic product (GDP) and employs 3% of employment nationwide.

Construction industry achieves its aims by combining land other factors of production including variety of raw materials and semi-processed components. This process of resource combination involves all usual elements and functions associated with production of commodity. Most times, because of some challenges facing this sector of business management, capital funds are required based on long-term source of finance to purchase materials coordinate and organize the factors of production.

Detailed design of the product must be carried out and all these need to the financed. These therefore constitute challenges, Many indigenous building construction firms especially those ones who have inadequate financial base grapple with. Further aggravation to the problems of the indigenous firms is seen in the government award of contracts to foreign and big time contractors only and leaving no room for the participating of the indigenous contractors to national development.

In support of this assertion, Enwegbara (2012) sees the Nigeria’s construction industry as remaining at a cross road because government policies all these years have favoured awarding construction contracts to foreign contractors instead of their national counterparts. The reason explained above makes it obviously difficult for the indigenous firms to be reasonably established in the industry. The situation thus spells doom for the national economy because if the indigenous building contractors are forced out of business dues to the challenges, their death from the industry becomes imminent.


1.2 Statement of the Problem

The rate of influx of foreign construction firms in Nigeria and Government’s continued patronage of them, when critically analyzed does not communicate any good news to national economy. It has been argued by the public that the so called foreign constructors have little or no qualification for the jobs they are awarded. the uncertainty of their technical base does not guarantee safety of the facilities produced by them. On the contrary, some of our indigenous contractors are well known persons in the area services they render. However, the tendency of not patronizing indigenous construction firms subsequently keeps them perpetually in the lower rung of financial development. When critically studied they only but paint to the death of these indigenous contractors in the future.

On the other hard, if the foreign contractors eventually go back to their countries the situations leaves the indigenous ones not prepared to bear the burder of national development. The time is therefore ripe to proffer lasting solution to the challenges facing indigenous contractors who are the future developers of the national economy.


1.3 Objective Of The Study

The aim of this research is to critically analyze the various factors that affect the progress of the indigenous building construction firms so that solutions to aid their growth may be adopted.

The specific objective of this research work is as follows:

  1. To study the effects of government policies and procedures on indigenous.
  2. To x-ray the effects of poor financial structure on the indigenous building construction firm.
  3. To suggest was of solving the problem facing the indigenous construction firm.

1.4 Research Hypothesis

Hypothesis one
  • Hi: Government policies and procedures on indigenous building construction firms affect Building firms positively.
  • Ho: Government policies and procedures on indigenous building construction firms affect Building firms negatively.
Hypothesis Two
  • Hi: There is a strong relationship between financial base and the challenges faced by indigenous building construction firms.
  • Ho: There is no relationship between financial base and the challenges faced by indigenous building construction firms.

1.5 Significance of the Study

The following are the importance or the usefulness of this study:

  1. This research work will be helpful to individuals who will want to develop and own their own construction firms in the country to know the challenges facing the already existing ones in the country and to know how to tackle these challenges.
  2. The result of the findings will help building clients the government, builders, professional bodies and building team of specialist to jointly improve working conditions to building professional members in organizing seminars, workshop and conferences.
  3. The upcoming researchers will also find this research work very useful because it will serve as a reference material while carrying out a research on similar or a related research topic.

1.5 Scope and Delimitation of the Study

The study is delimited to the indigenous construction firms in Kaduna metropolis. The study will focus on the structure of the indigenous construction firms, the effect of government policies and other socioeconomic factors that affect the indigenous firms like scarcity and high cost of materials, scarcity of quality labour, state of plants and equipment, the problems of personnel development in the industry, poor management of resources and method of contractual procedures.


1.7 Limitation of the Study

The following are the limitation of this research work.

1. Time:

Time is one of major constraints to the success of this research work. Because of other activities the researcher is involved in, the study is carried out under a limited time.

2. Finance:

Insufficient finance militated against the success of this research work. Much literature were not reviewed and also few library were visited due to insufficient fund.

3. Respondents:

Indeed some attitudes of the respondents are discouraging in the sense that some are out rightly snobbish.


1.8 Definition of Terms

Construction Industry:

This is the sector of national economy engaged in preparation of land, repair of building structures and other real properties.

Building Construction:

Is a process of adding structure to a real property or construction of buildings.

Gross Domestic Product (GDP):

Is the market value of all officially recognized final goods and services produced within a country in a year, or period of time. GDP per capital is often considered an indictor of a country’s standard of living.

National Economic:

This is a national financial resources and its financial management with a view towards its productivity.

Government:

The group of people who are responsible for controlling a country or a state, managing the affair economically one made by a government political part, business etc.


1.9 Area of the Study

Kaduna Metropolis is situated between latitude 100 28′ and 100 37′ North and longitude 070 19′ and 070 31′ East and covers an area of approximately 260km2; the distance between the city’s eastern and western limits is approximately 13.7km (Fingesi, 2001). It is divided into two major local government areas: Kaduna North and Kaduna South. Other neighboring local government areas that comprise the entire metropolis are Igabi and Chikun.


Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to reiterate that the objective of this study was to examine the challenges of indigenous Building construction firms in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analysed and appropriate interpretation given.

In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in evaluating the challenges of indigenous Building construction firms in Nigeria.


5.2 Summary

This study was undertaken to examine the challenges of indigenous Building construction firms in Nigeria. The study opened with chapter one where the statement of the problem was clearly defined. The study objectives and research hypotheses were defined and formulated respectively. The study reviewed related and relevant literatures.

The chapter two gave the conceptual framework, empirical and theoretical studies. The third chapter described the methodology employed by the researcher in collecting both the primary and the secondary data. The research method employed here is the descriptive survey method. The study analysed and presented the data collected in tables and the hypotheses were tested using the chi square while the fifth chapter gives the study summary and conclusion.


5.3 Conclusion and Recommendations

Government policy and efforts to encourage Nigerian Contractors have taken several forms. One form was to reserve projects costing certain amount for only Nigerian Contractors and another was to encourage partnership with expatriate firms. In spite of these efforts, participation of Nigerian Contractors in the construction industry has been relatively small.

The position has improved somewhat during the execution of the Second National Development Plan. By this time, some engineers had entered the Construction Industry as contractors and their record so far has been encouraging.

A new innovation in the Government decision to participate in the construction industry by forming Joint construction companies with some expatriate firms. The original intention which presumably is to try to reduce cost, is a good one.

In this work we found out that Government policies and procedures on indigenous building construction firms affect Building firms positively and there is a strong relationship between financial base and the challenges faced by indigenous building construction firms.


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FAQ On “The Challenges Of Indigenous Building Construction Firms In Nigeria”


What are indigenous building construction firms in Nigeria?

  • Indigenous building construction firms in Nigeria refer to construction companies that are owned and operated by Nigerian citizens or entities.

What are the challenges faced by indigenous building construction firms in Nigeria?

Indigenous building construction firms in Nigeria face several challenges, including:

  • Limited access to finance: Many indigenous firms struggle to secure adequate financing for their projects due to limited access to loans and capital. Banks and financial institutions often require significant collateral and have stringent lending criteria, making it difficult for these firms to obtain the necessary funds.
  • Lack of technical expertise: Some indigenous firms may lack the technical expertise and knowledge required to handle complex construction projects. This can be attributed to limited access to training and professional development opportunities.
  • Inadequate infrastructure: Nigeria’s infrastructure, including transportation networks and utilities, is often inadequate and unreliable. This can significantly impact construction projects, causing delays, increased costs, and logistical challenges for indigenous firms.
  • Corruption and bureaucracy: The construction industry in Nigeria is notorious for corruption and bureaucratic hurdles. Indigenous firms may face demands for bribes, lengthy approval processes, and other forms of corruption that can hinder their operations and increase costs.
  • Competition from foreign firms: Indigenous construction firms often face stiff competition from foreign companies that may have more resources, technology, and experience. This can make it challenging for indigenous firms to secure contracts and maintain a sustainable business.
  • Inconsistent government policies: Frequent changes in government policies and regulations can create uncertainty for indigenous construction firms. Unclear policies and lack of continuity can disrupt projects and negatively impact the construction industry as a whole.

How can indigenous building construction firms in Nigeria overcome these challenges?

While overcoming these challenges may not be easy, there are several strategies that indigenous building construction firms in Nigeria can employ:

  • Seek partnerships and collaborations: Indigenous firms can consider forming partnerships or joint ventures with established construction companies, both domestic and foreign. This can provide access to technical expertise, financial resources, and better market opportunities.
  • Enhance technical skills: Investing in training and professional development programs can help indigenous firms improve their technical capabilities. This can be done through collaboration with educational institutions, industry associations, or government initiatives that offer training and certification programs.
  • Explore alternative financing options: Indigenous firms can explore alternative financing options such as crowdfunding, venture capital, or angel investors. Additionally, engaging with financial institutions to create specialized loan facilities for construction firms can improve access to finance.
  • Advocate for transparent and accountable governance: Indigenous firms can actively engage in advocacy efforts to promote transparency, accountability, and the rule of law in the construction industry. By supporting initiatives that tackle corruption and improve the business environment, indigenous firms can benefit from a more level playing field.
  • Leverage technology and innovation: Embracing technological advancements and innovative construction practices can improve efficiency, reduce costs, and enhance competitiveness. Indigenous firms can explore the use of Building Information Modeling (BIM), prefabrication, and other modern construction techniques.
  • Collaborate with the government: Indigenous firms can engage with the government to provide input on policies and regulations that affect the construction industry. By participating in relevant industry associations and dialogue platforms, firms can contribute to shaping a more favorable business environment.

Are there any government initiatives to support indigenous building construction firms in Nigeria?

The Nigerian government has implemented various initiatives to support indigenous building construction firms. These include:

  • National Housing Fund (NHF): This initiative indirectly supports the construction industry by increasing demand for housing.
  • Infrastructure Development Fund: Indigenous construction firms can participate in these projects and benefit from government contracts.
  • Small and Medium Enterprises (SME) development programs: The government has various programs aimed at supporting SMEs, including those in the construction sector. These programs provide access to finance, training, capacity building, and business development services.

It’s important to note that government initiatives may vary over time, so it’s advisable for indigenous firms to stay updated on available programs and opportunities.

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