Challenges in Accessing Finance by Small and Medium Construction Enterprises in Akwa Ibom State, Nigeria: Perspectives of Banks and other Financial Institutions

Ekanem Felix Effiong and Bassey Imikan Bassey

Small and medium-sized construction companies play a pivotal role in both the national economy and the construction industry. However, accessibility, cumbersome procedures and sometimes, denial to credit facilities from banks and other financial enterprises have been a major setback in many developing nations, including Nigeria. The study investigates factors influencing small and medium-sized construction contractors’ access to financing from the viewpoint of banks and other financial institutions in Akwa Ibom State. Data were collected from commercial and microfinance banks, mortgage institutions, and cooperative societies. Descriptive statistics were deployed to analyse responses from twenty-five (25) completed copies of the questionnaire. The results of the study revealed that the key problems impacting funding of Small and Medium Construction Enterprises’ (SMCE) are lack of collateral, absence of legally recorded and audited financial history, and an insufficient regulatory environment. It is recommended that Small and Medium Construction Enterprises should design and maintain accurate and up-to-date records of financial transactions. Government should institute policies that strengthen legal and regulatory frameworks for ease of obtaining bank loans. Also, institutionalising kYC (know your customer), financial management mentorship and orientation by financial institutions would boost trust in financial transactions including lending and borrowing.

Keywords: bank and financial institutions, construction, contractors, finance

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