| Abstract: | This dissertation presents the contribution of the Banks in the capacity building as well as project financing of the domestic construction firms which are involving in the infrastructure development activities of the country. The challenge of cash flow for contractors is well documented. Besides management related challenges, lack of capital, limited access to credit, payment delays and lack of proper regulatory framework has bedeviled the capacity of contractors to have sustainable cash flow. The main objective of this paper is to assess the significance of banks in relation to contractors’ cash flow problems in construction projects in Ethiopia especially in capacity building and project financing of the domestic construction firms in Ethiopia. The study took 17 construction firms under BC, WWC, Road construction and GC where a structure questionnaire was administered to 17 firms and 8 bankers. The study employed a descriptive research design in order to meet its objective. The study found that cash flow challenges were more significant at mobilization and implementation phase and to an extent at closure. It was also established that cash flow challenges have a direct bearing on project performance given their impact on project operations such as project delays, defaulting payments and declining new contracts. The study recommended enactment of necessary policies, laws and regulations geared towards increased allocation of financial resources to construction firms in order to fully support growth through easy access. Strategies to lower lending rates to what other developed countries have been explored. Furthermore, to improve the contribution of one party to the problem of the other, they should work together to enhance the relationship between contractors, banks, and occasionally the employer. |
