Assessment of How Financial Institutions In Tanzania Benefits Small And Medium Building Contractors

Abstract

The lack of capital has been identified by many researcher as the major cause of failure among the small and medium building contractors in Tanzania in securing valuable tenders from different clients especially government institutions. The main objective of this study is to asses on how the financial institutions benefits small and medium building contractors in Tanzania and proposed way forward to improve services and products. The data collected from sample size of 15 and 90 respondents from financial institutions and building contractors respectively. The data processed and analysed by SPSS to reflect clear understand of the findings. The findings analyzed showed that there are many products and services offered by financial institutions in Tanzania to its clients including building contractors. However, the study found challenges associated with the accessibility of the financial products and services from financial institutions. The challenges included;- unfavorable government policy favoring SMBCS, stiff market competition, increase of foreign contractors, lack of collateral/security pledge, lack of financial education, insufficient working capital, delay of payments especially from the government as well as lack adequate own equity to contribute in accessing the plants/equipment finance. Products and services from financial institutions had both positive and negative impact according to the evidences found in the study. This study recommend the financial institutions to concerted efforts to raise awarenes among SMBCS about the products and services provided and to review of financial charges and interest rate to favor the local SMBC. Since, majority of SMBCs has no collateral to secure loans from the bank. It is recomended by the study for them to invest in non-moveble asset like lands and houses