CREDIT FACILITIES IN THE FINANCIAL INSTITUTIONS FOR FINANCING CONSTRUCTION PROJECTS IN NIGERIA
CREDIT FACILITIES IN THE FINANCIAL INSTITUTIONS FOR FINANCING CONSTRUCTION PROJECTS IN NIGERIA
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Date
2004-08
Authors
MICHAEL, ANOSIKE NWABUEZE
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Abstract
Sometimes construction contractors had to seek external means of raising
fund to progress work. Thus, the need for this study titled “Credit
Facilities In The Financial Institutions For Financing Construction
Projects In Nigeria.” The study aims at articulating existing credit
facilities, their procurement, disbursement and utilization.
In the field study, two sets of questionnaires were administered to30 and
37 construction contractors and financial institutions respectively in some
locations. 26 and 37 of these were answered correctly and returned. Their
responses were collated. Descriptive analysis was used to analyze the
data obtained and presented in bar charts, histograms, graphs and tables.
The result revealed that, credit facilities are provided by financial
institutions for the construction industry. These credit facilities are:- Shortterm
(0-1 year) – LPO financing, factoring, treasury bills, which can be
used to finance working capital; Medium-term credits (2-10 years) Leases,
hire purchases, are used to acquire plants & equipment,
properties; Long-term credit facilities (above 10 years)-shares, stocks,
bonds, are used for capitalization and as collaterals.
In conclusion, the study revealed that financial institutions brand the
construction industry sector as ‘high risk” as such strict conditions and
high interest charges are used to discourage borrowers. Lack of accurate
records of transactions and good management militate against contractors
securing these facilities.
It is therefore recommended that, contractors should keep accurate
records and ensure good management to enable them secure these
facilities. The services of investment consultants will also assist
contractors know the types, when, where and how to source the best
credit facilities from the array of options available.
Description
A thesis submitted to the postgraduate school, Ahmadu Bello University, Zaria, in
partial fulfillment of the requirements for the award of the degree of Master of Science in
Construction Management in the Department of Building, Faculty of Environmental
Design, Ahmadu Bello University, Zaria Nigeria.
AUGUST, 2004
Keywords
CREDIT,, FACILITIES,, FINANCIAL,, INSTITUTIONS,, FINANCING,, CONSTRUCTION,, PROJECTS,, NIGERIA