ABSTRACT
The purpose of this study was to examine strategies of international joint venture partnerships in executing housing projects in Accra, Ghana. Ghana is experiencing rapid rural urban migration having a 4.2% increase every year. The total population living in the cities currently stands at twenty-two percent of the total (CIA World Fact book, 2010). To meet the demand for housing for this rate of population growth, Accra alone requires an annual supply of 120, 000 new housing units. The current annual supply is an average of 35,000 homes which means the deficit keep growing by 85,000 units per year. The National and County governments together with the private real estate developers have not been able to meet this demand because the construction projects are capital intensive. Hence the quest of getting a solution to the shortage of capital for implementing housing project, forms the objectives of this study which is to assess how legal, technological, political, economic and social-cultural strategies of joint venture partnerships in executing housing projects in Accra, Ghana. The study has used descriptive survey research design. The population target consisted of respondents from firms involved in the implementation of Urban renewal housing project in Ngong Road Estate, Accra. Stratified mode of sampling was used to obtain a sample of 30 respondents from construction contractors, land economists, quantity surveyors, engineers and architects. Data collection was done by administering questionnaires and interviewing respondents in the study. The data was cleaned, coded and entered into SPSS and analysis displayed in form of tables.
The study found that the legal strategies strongly affect the utilization of the International Joint Ventures. However the amount of money required to register a joint Venture partnerships does not influence the establishment of the establishment of it. In regards to the economic strategies, it was concluded that the economic indicators averagely affect the utilization of IJV in Ghana . The analysis also showed that incorporation of technology and automation of processes in real estate firms could significantly increase the utilization of IJV. The percentage of respondents who supported the relationship between the indicators and the IJV was significantly large and therefore the conclusion is that technology strongly affects the utilization of Joint Ventures in Ghana.
The results from the analyzed data from political strategies were diverse. However the percentage of those who agree and strongly agree are high (More than 75 %).Also “Number of operational restrictions imposed by the government to foreign investors” was the indicator that most respondents highlighted as crucial in the utilization of the real estate ventures Therefore, its concluded that the political strategies strongly affect the utilization of international ventures in the real estate sector.
From the findings, the real estate companies are encouraged to embrace technology and automation then the number of the International Joint Ventures would gradually increase. The legislature on the other hand are advised to device legal procedures that are friendly to the establishment of international ventures. Some of the current policies that exist are too harsh and don’t favor the establishment of international ventures for instance this research found out that the number of approvals required to set up an international joint venture are so many such that it discourages potential parties.
CHAPTER ONE
INTRODUCTION
1.1. Background of the study
Business organizations are currently facing complex and rapidly changing environment. For any venture to be successful and to survive the difficulties faced, organizations have to device means and ways of positioning themselves to the external environment (Mittral 2001). Organizations therefore need to invest more on formulating competitive strategies. Competitive strategy is the ability of a firm to meet and beat its competitors (Porter, 1985).
In the construction industry, one of the competitive strategies which is gaining popularity is formation of joint venture partnerships in order to bring together strengths that will enable firms survive the harsh terrain of the market. According to (Porter, 1998) joint venture partnership is a form of strategic partnership which seeks to unite investors with common goals and needs to pool resources to execute a project.
A JV partnership is a strategy which organizations use to execute specific projects by pooling resources together. It is entered through a formal coalition between two or more business organizations, usually legalized by signed contracts. Normally two or more enterprises formulate a strategy which each possess resources that the other partner doesn’t have and does not wish to develop internally in their organizations. Strategic alliances are critical elements to many business strategies. Porter (1998) posits that building business strategies is developing a wide success path on how an enterprise achieves its goals, objectives, vision and mission. There is no organization or institution which can execute all the projects on its own, therefore formation of alliances is a powerful means of achieving desired results and solutions for the clients, advancing entry to new markets and customers, and expanding the organizational knowledge base and capabilities. Organizations can increase their core competencies by venturing into same projects with organizations that have capabilities that complement theirs.
According to (Buono, 1997 and Coulson, 2005) alliances combine competencies and capabilities to create synergy and enable the partners to achieve what they could either not do at all, or could do only at reduced efficiency or greater cost. The fundamental aspect to success of alliances is the management competency and the way parties perceive the partnership. (Yoshino and Rangan 1995), proposed various forms of strategic alliances which include but not limited to Public Private
Partnerships, Franchising, Licensing and Joint ventures. The commonly used forms in real estate projects are Joint ventures and Public Private Partnerships.
Housing sector in Ghana.
There has been a considerable evolution of the housing sector in Ghana since independence in 1963. A major transformation started in 1968 when the then national authority passed a National Housing Policy which gave various government sectors the ability to provide decent and affordable housing for the nation. These sectors included National Housing Corporation, Municipal Council, civil service housing unit, and other parastals. National Housing Corporation led the development of government housing, being the main housing supplier for about twenty years. Local authorities all over the country led by Accra City Council followed suit by adopting the ways NHC developed and managed the housing units. On the other hand the national government facilitated the development of housing units meant for the civil servants working at national, provincial, and municipal levels of administration.
There came a rapid change in the housing sector situation in early 1980s onwards, There was a high rural urban migration especially Accra. Also the government authorities mandated to execute the development of housing became quite corrupt to an extent they almost collapsed. These led to demand of housing outstripping the supply. The economy of the country suffered to an extend it couldn’t finance the building of public houses. The situation worsened with the arrival of the structural adjustment programs (SAP's) in the 1980s and 1990s. The government reduced the civil service sector together with the funding initially allocated to housing.(National Housing Corporation, 2012).
Development of infrastructure is essential for the transformation of social-economic status of the country as anticipated in the Ghana Vision 2030. To make Ghana competitive and be in the global standards, the housing sector should strive to develop modern metropolitan cities and towns with its housing meeting international standards. The government through The Ghana Vision 2030 has set strategies and ways to measure the success in achieving the desired international housing standards. They include: identifying flagship projects then give support to initiatives geared towards it, developing strong housing institutional frameworks, nurturing culture of implementing housing projects with right quality, efficiency, scope and time, and ensuring the wellbeing of the environment is prioritized in housing project developments. The government also strives towards creating a humble environment for Private Sector participation in the provision of housing services through the Public-Private-Partnerships framework (Ruitha, 2010).
1.2. Statement of the problem.
Statistics done in the year 2007 shows that majority of the population in the entire world currently live in cities and towns. It shows a systematic percentage increase from 1800 when it was 3% to 1950 when it was 30%. Thereafter up to 2007, there has been a gradual increase to 55% with more developed countries hitting 74%. Among this world urban population 1 billion live in informal settlements e.g. slums. The figure is anticipated to double by the year 2030 (UN Habitat report, 2007). This is due to the high growth rate of the urban populations which is not proportional to the development of services and infrastructure.
Ghana is following the trend of the world developed countries. It is experiencing high rural urban migration having a 4.2% increase every year. The total population living in the cities currently stands at twenty-two percent of the total (CIA World Fact book, 2010). To meet the demand for housing for this rate of population growth, Accra alone requires an annual supply of 120, 000 new housing units. The current annual supply is an average of 35,000 homes which means the deficit grows by 85,000 units per year. This high growth rate of housing demand causes the prices to sky rocket hence pushing citizens who cannot afford to move from formal housing market into the slums.
For a society to progress economically development of quality infrastructure and affordable housing is key. To achieve this is a great challenge because housing is capital intensive and highly leveraged. Securing a loan at a friendly interest rates is a complex process worsened by delays in approvals and disbursal. A times financial institutions commit to finance a project but neglects to disburse the money on the desired time claiming they will only disburse after construction is complete or when materials and labour have been mobilized and are on site.
The Government has a duty to provide decent and affordable housing to the Ghanaian Citizens. Part of this responsibility has been delegated to the Counties through the devolved government structure. The key challenge in meeting this duty has been getting sufficient funds to implement
such capital intensive programmes. It is for this reason, that Joint Venture (JV) and Public Private Partnership’s solutions have been developed under the PPP act.
Under the joint venture (JV) business agreements, the government/project sponsor and the investors will agree to develop for a finite time, the proposed houses by pooling resources, share responsibilities during implementation then later share the proceeds from the investment. Due to this international investors have been flocking the Ghanaian market searching for opportunities to invest their resources in the different sectors of the economy. This opportunity however has not been fully exploited in the Ghanaian real estate industry. The National and the county governments have not utilised well the provisions it has been given in the PPP Act of the Ghanaian Laws in providing services to the citizens. Private developers also have not embraced well the use of joint venture structures to tap the private equity locally and internationally.
Hence the purpose of this study was to explore the strategies affecting the real estate developers and the governments in tapping the internationally available equity for financing the housing projects in Accra, Ghana with a quest of solving the shortage of good quality housing currently experienced in the city.
1.3. Purpose of the study.
The purpose of this study is to examine strategies of international joint venture partnerships in executing housing projects in Accra, Ghana.
1.4. Research objectives
1. To assess how legal strategies of international joint venture partnerships in executing housing projects in Accra, Ghana.
2. To establish how technological strategies of international joint venture partnerships in executing housing projects in Accra, Ghana.
3. To review how political strategies of joint venture partnerships in executing housing projects in Accra, Ghana.
4. To assess how economic strategies of joint venture partnerships in executing housing projects in Accra, Ghana
5. To review how social-cultural strategies of joint venture partnerships in executing housing projects in Accra, Ghana.
1.5. Research questions.
1. How does legal strategies of international joint venture partnerships in executing housing projects in Accra, Ghana?
2. In what ways does technological strategies of international joint venture partnerships in executing housing projects in Accra, Ghana?
3. How do political strategies of international joint venture partnerships in executing housing projects in Accra, Ghana?
4. In which ways do economic strategies of international joint venture partnerships in executing housing projects in Accra, Ghana?
5. How does Social-cultural strategies of international joint venture partnerships in executing housing projects in Accra, Ghana?
1.6. Research hypotheses.
1. H0: Legal fa8ctors do not influence utilization of International Joint Venture Partnerships in executing housing development projects in Accra, Ghana.
2. H0: Technological strategies do not influence utilization of International Joint Venture Partnerships in executing housing development projects in Accra, Ghana.
3. H0: Political strategies do not influence utilization of International Joint Venture Partnerships in executing housing development projects in Accra, Ghana.
4. H0: Economic strategies do not influence utilization of International Joint Venture Partnerships in executing housing development projects in Accra, Ghana.
5. H0: Socio-cultural strategies do not influence utilization of International Joint Venture Partnerships in executing housing development projects in Accra, Ghana.
1.7. Significance of the study.
The findings of this research informs the Governments and other Public and private sector bodies on the significance of international joint venture partnerships and how synergy is created in a project between the two parties. International joint venture partnerships gives the government an alternative method of fulfilling its responsibility of housing its citizens by getting an humble source of finance and technical expertise in capacities which would proof quite expensive if the government was to finance from its revenue collection.
The state corporations, developers, contractors and other stakeholders in the construction industry would benefit from this study because it would highlight some of the strategies which are influencing the performance of international joint venture partnerships in the housing sector and hence they would institute measures to mitigate any of the constraining strategies. The information gathered and presented in this study will serve as a guideline in the decision making for the parties concerned.
For academics and research, the study will contribute to the existing body of literature thereby acting as a source of reference. In addition, this study would provide areas for further research where future scholars could explore to widen the knowledge base on project partnerships. The outcomes of this study would be significant to scholars in the field of Joint venture structuring.
1.8. Basic assumptions of the study
The interviewees responded to the enquiries and filled the questionnaire in a truthful and open mode. The distribution of the sample selection was fair and assures that all the interviewees had all experienced the same or similar phenomenon of the study. Participants had a sincere interest in participating in my research and did not have any other motives.
1.9. Limitation of the study There may have been unknown conditions or strategies at the facility where the participants resided, worked, or studied that could have biased the responses of the participants. When collecting data from the elderly, it is possible that some of their recollections of events, situations, and feelings could have been inaccurate. The number of participants may have not been a good representation of the entire population to adequately draw conclusions. The study had time limitation of five months. The results might have been affected by the operations of organization during that specific time period.
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