ANALYSIS OF FAILURE CAUSES OF SMALL-SCALE CONTRACTORS IN ZAMBIA

Abstract

The construction industry has been one of the fastest growing industries in Zambia from 2010 to 2019, recording an average contribution of about 9.9 percent of National Gross Domestic Product. However, this growth contribution appears to be made by foreign owned companies who account for less than 5 percent of registered contractors, but have a share of over 90 percent of the works contracts mainly from local and central governments. Small Scale Contractor business in Zambia is prone to failure and stagnation, with the sector witnessing failure rate of 45%. As in the case of any other business sector, failure, collapse, bankruptcy, and or closure terms are common words in the construction industry since construction industry involves many risks. The objective of the study was to understand failure causes of Small-Scale Contractors from their perspective in Zambia and come up with measures that can assist the sector to grow and become sustainable. The study was a national wide study with respondents drawn from all the ten (10) provinces of Zambia using a mixed research method with a bias to qualitative research method. The sample for the research consisted of 348 owners/managers of Small-Scale Contractor businesses calculated from the entire population of registered Small-Scale Contractors on the National Council for Construction data base. The respondents were selected using purposive sampling as this method was deemed to be the best suited method since it captures respondents with varying profiles ideal for this study. The research instruments used consisted of observation, open-ended questionnaires and close-ended questionnaires made on a 5-point likert scale with questionnaires distributed to all the 10 provinces of Zambia. The 5-point likert scale was ideal as it reduces the frustration levels of patient respondents and increases the rate and response quality and also that for larger studies like in this case where (N greater than 100). The research findings indicate that difficulty in acquiring works from clients especially the local and central governments, inadequate financial and technical capacity among local contractors, difficulty in getting payment from clients, lack of experience, and corruption are the major causes of (SSCs) business failure. The study presents a number of recommendations, including enhancement of training for (SSCs) business owners and managers in managerial and entrepreneurial skills, government support to (SSCs) by way of enforcing the 20% subcontracting policy and stake holder fight against corruption and nepotism.