Impact of financing on competitiveness of local construction contractors

Abstract

The influx of foreign contractors who have a huge financial backing has seen the construction industry dominated by such contractors. In Uganda today, most of the contracts are taken up by Chinese firms who have financial support and backing from their parent countries. This has rendered the local contractors dormant and remained uncompetitive in the face of such a challenge. Left to focus only on small construction works, maintenance works and minor rehabilitations, they have remained uncompetitive. This research sought to understand the impact of financing on the competitiveness of local construction companies in Uganda. The scope involved 36 contractors out of 52, which were issued with questionnaires and staff from UNABCEC and UNRA. The focus was on local companies registered with UNABCEC and within the geographical regions of Kampala and Wakiso districts. Through primary and secondary data, the research revealed that indeed financing would spur capacity development of local contractors and help them compete favourably. Though there was access to credit facilities, it was revealed that financial institutions provided financial tools that do not meet the needs of the industry and the terms were not favourable for the respondents. Other challenges faced included non-favourable environment that disadvantaged local contractors in terms of regulations and no protection from government Some of the proposed measures to address these challenges included provision of financial tools tailored for the industry, providing financial tools with favorable terms, government purposely making LCC a priority that will spur development of the economy by enacting laws and policies that help to build capacity. Development of the economy can only be sustained when local capacity is built up, access to credit or financing can help the local industry build capacities in terms of equipment, raise required bid security, retain highly trained staff and build up systems that will render them competitive.