A survey of financial challenges facing small contractors in western Kenya

Abstract

The study is a survey of financial challenges faced by small contractors in western region. The study is inspired by common business failures witnessed among this class of businesses in western region. The identified challenges are unique to small contractors in western region. This study is vital to the Governments policy formulation and implementation in SME sector and specifically small contractors. Financial institution will gain from the study by appreciating the challenges related to them and put up measures to avoid them and support the small contractors. The small contractors themselves will mirror their situation through the report and put up corrective measures so as to ensure that their businesses continue to a going concern perpetually. The main objective of the study was to determine such challenges that are experienced by the small contractors in western region. The data used in the study was primary data collected directly from contractors. The contractors were sampled out of a population of 427 small companies carrying out construction in western to come up with a sample of 87. Questionnaires and interviews were used to collect the data which was then summarized statistical From the findings, ten challenges were identified and ranked according to severity. Access to Credit was ranked highest, coming out as the biggest challenge to the small contractors in western region. This implies that the small contractors suffer from lack of funds for running their business. Bribery on the other hand was ranked least among the challenges. This however showed that the respondents were uncomfortable to declare if they have participated in a bribe. In conclusion, the study summarized the challenges and identified the parties that are supposed to help in mitigating the challenges. The Government was called upon to relax both the regulations and the taxes in the sector. Banks on the other hand asked reduce the cost of capital to reasonable levels and employ fair practices during loan appraisal processes.