Impact of macroeconomic factors on performance of construction industry in Tanzania: Fid-Bau Portal

Impact of macroeconomic factors on performance of construction industry in Tanzania

Makoye, Masoud / Mlinga, Ramadhan S. / Ndanshau, Michael O. A.

Construction industry is crucial for economic development of any country, and Tanzania is no exception. Despite its importance, construction industry suffers from poor performance. This study investigated the impact of macroeconomic factors on performance of construction industry in Tanzania, with the purpose of developing a model which may help policy makers in their endeavor to develop the construction industry. The study adopted longitudinal research design and archival research method. All sources of archival datasets were selected based on judgmental sampling, whereas multiple regression model was employed for data analysis. Inflation rate, interest rate, labour and technology were found to be statistically significant predictors of construction growth. According to empirical results, a unit increase in inflation and interest rates decreases construction growth by 0.106 and 0.354, respectively. Further, an increase in labour and technology increases construction growth by 0.208 and 0.272, respectively. The limitations of this study include the fact that data was limited to official statistics and reports for the period from 1962 to 2020. These statistics exclude informal sector, thus, invariably underestimating output of construction industry. This study recommends reduction of interest rates on bank loans and creating policies to control and stabilize macroeconomic factors within the country.