1.1 Introduction
In Nigeria, indigenous building construction firms play a crucial role in the country's economic development, contributing significantly to infrastructure development, job creation, and the growth of local industries. However, despite their importance, these firms face numerous challenges that hinder their growth and sustainability in the construction sector. Understanding these challenges is essential for devising strategies to support and strengthen indigenous building construction firms in Nigeria (Ezebuiro et al., 2017). Low levels of involvement and frequent exclusion from large-scale building projects have been reported for Nigerian indigenous contractors. Their susceptibility to bankruptcy and the consequent likelihood of poor project execution and abandonment have been linked, among other things, to mismanagement of cash and working capital.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitation of the study and Definition of terms.
1.2 Background of Study
Nigeria's construction industry is a significant contributor to the country's economy, employing a large portion of its workforce and providing essential infrastructure for development. Indigenous building construction firms, comprising locally owned and operated companies, are integral to this sector. However, these firms encounter various obstacles that impede their growth and competitiveness. Understanding the specific challenges faced by indigenous building construction firms is essential for devising targeted interventions to support their development and enhance the overall performance of the construction industry in Nigeria (Oyedele et al., 2008).
According to business dictionary, an online dictionary, “the construction industry is that sector of the national economic engaged in preparation of land and construction, alternation and repair of building, structures and other real properties. The industry is engaged in many types of building and civil engineering jobs. These include jobs in carpentry, road construction, bridge development and home design. The industry occupies a very important position in the whole world because it is responsible for creating infrastructures for cities, towns, and countries.
Oyefeko (1991) as cited in Building construction industry …(2014). National housing Policy (NHP 2006) as in Building construction industry (2014) also confirmed this assertion when it revealed that the industry has an output of 11% Gross domestic product (GDP) and employs 3% of employment nationwide.
Construction industry achieves its aims by combining land other factors of production including variety of raw materials and semi-processed components. This process of resource combination involves all usual elements and functions associated with production of commodity. Most times, because of some challenges facing this sector of business management, capital funds are required based on long-term source of finance to purchase materials coordinate and organize the factors of production.
Detailed design of the product must be carried out and all these need to the financed. These therefore constitute challenges, Many indigenous building construction firms especially those ones who have inadequate financial base grapple with. Further aggravation to the problems of the indigenous firms is seen in the government award of contracts to foreign and big time contractors only and leaving no room for the participating of the indigenous contractors to national development.
In support of this assertion, Enwegbara (2012) sees the Nigeria’s construction industry as remaining at a cross road because government policies all these years have favoured awarding construction contracts to foreign contractors instead of their national counterparts. The reason explained above makes it obviously difficult for the indigenous firms to be reasonably established in the industry. The situation thus spells doom for the national economy because if the indigenous building contractors are forced out of business dues to the challenges, their death from the industry becomes imminent.
Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Challenges of Indigenous Building Construction Firms.
1.3 Statement of Problems
Investigation revealed that indigenous building construction firms in Nigeria face a myriad of challenges that hinder their growth, sustainability, and competitiveness in the construction industry. These challenges range from economic and financial constraints to institutional and regulatory barriers, as well as technical and operational limitations. Understanding and addressing these challenges are crucial for fostering the development of indigenous firms and improving the overall performance of the construction sector in Nigeria (Ajibade et al., 2013).
The rate of influx of foreign construction firms in Nigeria and Government’s continued patronage of them, when critically analyzed does not communicate any good news to national economy. It has been argued by the public that the so called foreign constructors have little or no qualification for the jobs they are awarded. The uncertainty of their technical base does not guarantee safety of the facilities produced by them. On the contrary, some of our indigenous contractors are well known persons in the area services they render. However, the tendency of not patronizing indigenous construction firms subsequently keeps them perpetually in the lower rung of financial development. When critically studied they only but paint to the death of these indigenous contractors in the future.
On the other hand, if the foreign contractors eventually go back to their countries the situations leaves the indigenous ones not prepared to bear the border of national development. The time is therefore ripe to proffer lasting solution to the challenges facing indigenous contractors who are the future developers of the national economy.
1.4 Aim and Objectives of Study
The aim of this research is to critically analyze the specific obstacles faced by indigenous building construction firms operating in Nigeria and propose strategies for addressing these challenges to enhance their competitiveness and sustainability.
The specific objectives of this research work are stated as follows:
- To x-ray the effects of poor financial structure on the indigenous building construction firm.
- To study the effects of government policies and procedures on indigenous; and
- To suggest was of solving the problem facing the indigenous construction firm.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- What are the effects of government policies and procedures on indigenous building construction firms?
- Will building up a strong financial base aid the growth of indigenous building construction firms?
- What are the factors and challenges militating against the growth of the indigenous building construction firms in Nigeria?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: Indigenous building construction firms in Nigeria does not face significant challenges stemming from a combination of socio-economic factors
- H1: Indigenous building construction firms in Nigeria face significant challenges stemming from a combination of socio-economic factors
1.7 Significance of Study
The significance of studying "The Challenges of Indigenous Building Construction Firms in Nigeria" lies in its potential to contribute valuable insights and solutions to several key stakeholders, including policymakers, industry practitioners, investors, and academics. Here are some significant aspects:
- Economic Development: Understanding the challenges faced by indigenous building construction firms is crucial for Nigeria's economic development. The construction sector is a significant contributor to GDP and employment. Addressing the challenges could enhance the sector's efficiency and productivity, leading to overall economic growth.
- Employment Opportunities: The construction industry is a major employer, especially for low-skilled and semi-skilled workers. By identifying and addressing the challenges faced by indigenous firms, the study can help create more stable and sustainable employment opportunities, thereby improving livelihoods.
- Infrastructure Development: Nigeria, like many developing countries, requires substantial infrastructure development to support its growing population and economy. Indigenous construction firms play a vital role in this development process. Understanding their challenges can inform strategies to improve infrastructure delivery and quality.
- Policy Formulation: Policymakers require evidence-based insights to formulate effective policies that support indigenous businesses. Understanding the challenges faced by construction firms can help policymakers design targeted interventions, such as access to finance schemes, infrastructure improvement programs, and regulatory reforms.
- Sustainability and Resilience: Indigenous construction firms often operate in challenging environments characterized by resource constraints and vulnerability to external shocks. By studying their challenges, the research can inform strategies to enhance the sustainability and resilience of these firms, fostering long-term viability.
Furthermore, the result of the findings will help building clients the government, builders, professional bodies and building team of specialist to jointly improve working conditions to building professional members in organizing seminars, workshop and conferences. The upcoming researchers will also find this research work very useful because it will serve as a reference material while carrying out a research on similar or a related research topic.
1.8 Scope and Delimitation of the Study
The scope of the research is focused on the Challenges of Indigenous Building Construction Firms in Nigeria. The study is delimited to the indigenous construction firms in Enugu urban only.
The study will focus on the structure of the indigenous construction firms, the effect of government policies and other socio-economy factors that affect the indigenous firms like scarcity and high cost of materials, scarcity of quality labour, state of plants and equipments, the problems of personnel development in the industry, poor management of resources and method of contractual procedures.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
- Initial Cooperation Delay from Respondents: A particular limitation of this work came as a result of the respondent refusal to offer their cooperation at the initial time they were contacted. This contributed in making the success of this research study difficult.
1.10 Definition of Terms
Building Construction:
It is a process of adding structure to a real property or construction of buildings.
Construction Industry:
This is the sector of national economy engaged in preparation of land, repair of building structures and other real properties.
National Economic:
This is a national financial resources and its financial management with a view towards its productivity.
Government:
It is the group of people who are responsible for controlling a country or a state, managing the affair economically one made by a government political part, business etc.
Gross Domestic Product (GDP):
It is the market value of all officially recognized final goods and services produced within a country in a year, or period of time. GDP per capital is often considered an indicator of a country’s standard of living.