Indigenous Construction Business Financing A Case Study Of The National Construction Corporation Of Kenya

Abstract

"Indigenous Construction Business Financing A study of the National Construction Corporation of Kenya." Construction business requires more than more additional funds. With some training, especially in the management of business, the construction businessmen could raise enough funds internally so that the need for external funds would not arise. However when there is a genuine need for additional funds the indigenous construction businessmen find it difficult to obtain the same. First there is the stiff competition from other, businessmen. These businessmen are also inexperienced in the art of presenting their need for additional funds. They have also been in business for a relatively short period and hence the financiers would not be able to assess their previous performance. The Government of Kenya created the National Construction Corporation to help these indigenous construction businessmen in solving their problems. In playing its role as financier of the indigenous construction business the National Construction Corporation could adopt practices that make it difficult for the indigenous construction businessmen to benefit effectively. The main objective of this study was to evaluate the effectiveness of the National Construction Corporation as an instrument of financing indigenous construction business. The main findings of this study are:- That the indigenous construction businessmen obtain the amount of loan they request for from the corproation; that the value of security pledged by these businessmen plays a very insignificant role in the amount of loan approved; That the indigenous construction businessmen have little to offer as security except land; that there is no proper control of loans issued to the indigenous construction businessmen; that the methods of safeguarding against credit-diversion are not fool-proof;

that the indigenous construction businessmen are generally dissatisfied with the financial assistance they receive from the corporation and that, overall, the National Construction Corporation is not an effective instrument of financing indigenous construction business.