The Federation of Construction Industry in Nigeria (FOCI), also known as the Federation of Building and Civil Engineering Contractors, has said that it expects the new government to be headed by Ahmed Bola Tinubu to do five basic things in the construction industry.
The contractors want the Tinubu government to come up with a policy that will enable it to establish a construction bank that will focus solely on the funding of infrastructure development in the country for the benefit of the economy.
Because the construction body expects the new government to continue with the infrastructure projects initiated by the outgoing administration and also pay inherited debts, it reasons that floating a construction bank will help the government to finance construction projects at single-digit interest rates.
“Development of infrastructure, which is at the heart of every administration’s core objective, is being executed by the construction industry. Financing of projects is a huge challenge due to paucity of funds and the attendant high-interest rates of borrowing from commercial banks,” Olubunmi Adekoje, director general of FOCI, said.
Adekoje, who spoke in an interview with BusinessDay, added that new contracts were awarded at high naira value, but the annual budgetary allocation remained the same, making the connection between the award of contracts and funding of existing capital budget unsustainable.
The director-general said that there was a need to secure the confidence of investors and ensure the survival of the construction industry and the economy, noting that such action would boost employment and ensure rapid infrastructural development in the country.
She recalled initiatives such as the issuance of Sukuk Bonds, Road Infrastructure Development and Refurbishment Investment Tax Credit that were carried out by the out-going administration, noting that those initiatives improved the situation of the construction industry which is why, she said, FOCI expects the next administration to continue with them.
According to her, FOCI also wants the Tinubu government to review the present fiscal and monetary policies as these play a fundamental role in the nation’s development. “One of the positive outcomes of these policy tools on economic performance is to help the country achieve sustained growth whilst reducing instability in the economy,” she said.
Continuing, Adekoje said, “on the flip side, skewed and contradictory fiscal and monetary policies have the tendency to create shocks and uncertainties in the business community with consequential effects on business survivability, investment promotion and national development at large. Many companies are shutting down operations, while capacity utilisation of others has reduced significantly due to unavailability of inputs.”
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She lamented the scarcity of FOREX for business purposes, stressing that there was no access to foreign currency for letters of credit, purchase of equipment, plants and spare parts etc, adding, “businesses are forced to seek alternative means for their legitimate needs. The gap between the official and non-official rate implies that businesses lose their hard-earned money to middlemen.”
Insecurity remains the biggest single issue which has a tremendous negative effect on businesses and Nigeria as a whole, Adekoje said, explaining that it has increased the cost of doing business and discouraged investors from business opportunities.” Many of our members are unable to access construction sites because of insecurity issues,” she said.
She pointed out that many contracts were on hold because of price fluctuations and the inability of contractors and clients to agree on an acceptable variation of prices as a result of inflation, naira devaluation, access to foreign exchange, and global logistics challenges as a result of the war in Ukraine, among others.
“The construction industry is one of the highest employers of labour in Nigeria. Failure to address these challenges would result in higher youth unemployment which no society desires,” the director general said.
