Contractors' access to funding for infrastructure projects in Nigeria: overcoming the present challenge

Ogunsanya, Bukunmi, Aigbavboa, Clinton Ohis and Thwala, Didibhuku Wellington (2017) Contractors' access to funding for infrastructure projects in Nigeria: overcoming the present challenge. In: The Ninth International Conference on Construction in the 21st Century (CITC-9); 05-07 Mar 2017, Dubai, United Arab Emirates. (Unpublished)


In certain countries, specialized banks are established to fund infrastructure development. These banks provide financing to facilitate the delivery of projects which usually are beyond the financial capability of contracting organizations. Literature confirms that for real development in certain critical sectors of a nation’s economy to occur, the support from government and institutional investors are essential. Hence, the need to evaluate contracting firms’ access to capital funds to executed construction contracts. The methodology adopted is an exploratory qualitative research approach. The study entails interview of 32 contracting organizations top management staff and a director from one the foremost pension fund administrators in Nigeria. The findings show that there are few of such specialized banks or funding organizations for infrastructure delivery in the country. The Central Bank of Nigeria in 2010 provided financing line of N300Billion for Power and Aviation projects alone. While commercial banks are willing to assist with shortterm loans, the interest rates and service charges make the contract unprofitable on the long run. This is because most public construction projects are rarely delivered to time. This situation makes the commercial bank loan less desirable. Also, findings show that there are some Development Finance Institutions in the country, but these are hardly able to provide the mega funds required for major infrastructure projects such as roads, dams and rail construction. These have left the operating space for infrastructure delivery to multinational construction firms and highly capitalized local construction companies. Alternative funding sources were proposed for contractors that will be inclusive. That which will be a composite arrangement of capital funds from internal financial institutions, external financial institutions, institutional investors and donor agencies.

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