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The interest of the study focused on role of commercial banks in development
financing in Tanzania, the case of costruction sector. Objectively, the study aimed to
evaluate financing modalities on construction sector at pre-project, to evaluate
financing modalities on construction sector at post-project, to analyse correlation
between growth of the commercial banking industry and construction sector and to
expound financing options to the construction sector.
The study’s methodology encompassed of the survey research design that was carried out
at 6 different Institutions namely; 5 CBs, Tanzania Bankers Association (TBA), Bank of
Tanzania (BoT), 19 Construction Projects, Engineering Registration Board (ERB) and the
Ministry of Works (MoWs) in Dar es Salaam. The study deployed a sample size of 55
respondents, thus attained 92 percent response rate. Purposive and snowball sampling
procedures were applied in the study.
Results of the study showed that 97 percent of respondents identified over draft facility as
one of the Commercial Banks’ financing option, other options include term loan, finance
leasing and bid bond or guarantee as identified by 87 percent of resondents. Moreove, the
study revealed further that there was a perfect correlation between growth rate of
commercial banking industry and growth rate of the construction sector as both had an
annual average growth rate ranging from 3% - 3.5%.
The study recommended 77 percent of commercial banks found not offering credit for
finance leasing to venture it given the newly regulation of 2011 for the same permits.
However, analysis of cost of fund exposed to the construction sector and critical risk
assessment on financing the construction sector were suggested as areas for future studies. |
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