Abstract
M.Tech. (Construction Management)
SMEs are recognised for their contribution to the South Africa construction industry as a result of income generation, job creation and economic development. However, they face different challenges which impede their potential in the construction industry, one of which is credit accessibility. However, few studies have focused on the predictors of credit accessibility in small and medium construction enterprises (SMEs) in South Africa construction industry. Therefore, this research study investigates the predictors of credit accessibility for small and medium construction enterprises (SMEs) in the South African Construction Industry.
A deductive methodology approach was used to examine this problem. A questionnaire was developed from extensive literature review. The questionnaire was piloted with 30 construction SMEs to achieve its content validity. Two hundred and ten (210) structured questionnaires were distributed and 179 useable questionnaires were returned from a convenient sample of SME contractors in the Gauteng province of South Africa.
The study established that the challenges the construction SMEs strongly experienced in accessing credit were; lack of collateral, lack of cash flow statement and lack of owners’ equity. The study revealed that 98.9% of SMEs access their credit through commercial banks. Furthermore, it was established using binary logistic regression that full credit accessibility is predicted by; the age group and the current position of the personnel in the organisation. Furthermore, the tax number of the business and the location of the business also predicted full credit accessibility. The gender of the respondent, type of business ownership and collateral did not predict full credit accessibility. The Statistical Package for Social Science (SPSS) version 22 was used in the analysis.
The study informs the construction SMEs owners and managers to provide their age, and their current position in the organisation when applying for credit. Furthermore, they should provide the tax number of the business and the location of the business when applying for full credit from a financial institution in South Africa.