Retrospective Analysis of Failure Causes of Small-Scale Contractors’ Business in Zambia: Contractors’ Perspective

The construction industry has been one of the fastest growing industries in Zambia, contributing about substantially to the national gross domestic product (GDP). However, this growth appears lopsided towards foreign-owned companies who account for less than 5% of registered contractors, but have a share of over 90% of the works contracts. This has been attributed to the inadequate financial and technical capacity among local contractors, fragmented nature of the industry, excessive competition, relatively low entry barrier, high uncertainty and risk involved. As in the case of any other business sector, failure, collapse, bankruptcy and/or closure are common words in the construction industry since the construction industry involves many risks. The objectives of this research have been achieved by means of interviewed questionnaire. It is well established that a number of factors contribute disproportionately to the failure of small-scale contractors (SSCs) in Zambia. This chapter examined the contribution of managerial, financial and external factors to the failure of SSCs in the Zambian context. The research adopted a positivist theoretical perspective by utilising a questionnaire as a primary data collection instrument within the qualitative research technique. Data was collected from a total of 348 respondents being business owners of failed businesses, business managers and owners of currently surviving businesses. The data was analysed with the aid of both Microsoft Excel and Statistical Package for the Social Sciences (SPSS) programmes. The results ascertain that insufficient skills in the domain of financial management, lack of business management skills, misapplication of business working capital, overtrading and corruption are among the factors that contributed to the failure of SSCs in Zambia.