CREDIT FACILITIES IN THE FINANCIAL INSTITUTIONS FOR FINANCING CONSTRUCTION PROJECTS IN NIGERIA

By

Author

Presented To

Department of Environmental Design

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.