Establishing ways of developing sustainable small and medium enterprise contractors in Zambia

Abstract

The Zambian construction industry is comprised of more than 90 percent small and medium enterprise (SME) contractors who are faced with a myriad of constraints that affect their performance with regards to quality, cost and timely delivery of projects. The research was aimed at establishing ways of developing sustainable SME contractors in Zambia. Using a non-probability purposive sampling on industry stakeholders that included clients, consultants, financial institutions, regulators and SME contractors in grade 6 to 3, mixed methods involving 20 semi structured interviews and 75 questionnaires was used in the study. The results of the study established that SME contractors in Zambia were faced with various constraints which emanated from the business environment, the client and also from their own deficiencies. The study established that delayed payments was the highest ranked constraint among Zambian SME contractors. The measures that government had put in place which included: the 20 percent subcontracting policy; restriction of foreign contractors to grade 1 and 2; the Construction Finance Initiatives; preferential procurement regulations had minimal positive impact with regards to developing sustainable SME contractors in Zambia. The study established that for SME contractors to develop government had to take deliberate and well-coordinated measures to provide an enabling environment for their growth. This study established that the measures important in the development of SME contractors in Zambia were: provision of more efficient and decentralized payment procedures; provision of material or loan guarantees by contracting agencies to suppliers or banks; establishment of construction bank for SME contractors; provision of clearly defined subcontracting policies in the entire construction sector; provision of more training and advisory services; provision of tax incentives; increase access to equipment through hire purchase; provision of contractor development programmes; provision of well thought out tendering preferences; provision of mobilization allowances in contracts; lower retention monies and also provide contract splitting to help SME contractors easily access contracts. Key words: contractors, constraints, development, SME, sustainable, Zambia