Besides coronavirus pandemic, if there is any major economic issue that agitates the minds of most Nigerians today, it the looming recession which experts say will be the worst in 30 years.
For a mono-product economy like Nigeria, this is a sobering moment which calls the managers of its economy to start looking beyond the volatile oil market and the crippling impact of COVID-19 on oil price.
It is time for the Nigeria to prioritise growth areas in the economy. And one of such is construction which, in this context, is that economic activity that leads to the creation of buildings and infrastructure—roads, rails and bridges.
Construction, arguably, is a growth enabler given its capacity to create multiple jobs with multiplier effects on the economy.
It is estimated that about 20 million jobs will be lost in Africa after the pandemic. With Nigeria and Angola projected to be the worst hit in sub-Saharan Africa.
It follows therefore that the country needs to swiftly focus on that sector that can generate sufficient activities that will reflate the economy by creating jobs and promoting trade and commerce.
Whether it is infrastructure provisions such as roads, rails and bridges, or real estate activities involving the building of residential houses, commercial facilities such as offices, retail malls or hotels, construction creates a good number of jobs by engaging people as skilled or unskilled labour.
Experts say that while a kilometre of road construction can employ over 30 skilled and unskilled labour, it is more when building a house. It is estimated that everyone square metre of building activity creates jobs for three persons, meaning that building 1000 square metres guarantees about 3,000 jobs.
At no time has it been more frustrating looking at the number of Nigerians who are either “homeless” or are living in sub-human conditions during this lockdown and stay-at-home regime. Many people spend much of their time on streets and roads because there are no homes.
We are, therefore, convinced that the proverbial 17 million housing units’ deficits in Nigeria does not reflect the true housing situation in the country. It is much more than that, meaning that more houses need to be built to provide homes for the many “homeless” citizens.
To make this happen, government has to shift position. We are not in any way advocates of government’s involvement in the provision of housing for the citizens. But it has a role to play.
Apart from infrastructure, investors in real estate in general and housing in particular, need incentives such as tax holiday for those of them that opt for low cost housing; reduction in land charges, reduction in import duties, and review of the Land Use Act which is a major clog in housing developing in the country. Governor’s Consent is a big obstacle to ease of property registration in the country and it needs to be expunged from the Act.
We believe that leveraging opportunities in this sector serves dual purposes of providing shelter and creating jobs, leading to wealth generation. A World Bank report estimates that, at N3.5 million per three-bedroom house, the value of the opportunities in the sector is about $385 billion.
Right now, Nigeria is looking for ways to lift over 100 million of its citizens out of extreme poverty. Coronavirus will definitely add to that number, meaning that no effort should be spared by government to create the enabling environment for operators in the sector to increase their activities, create more jobs and grow the economy.
We share analysts’ view that while the multiplier effect of investment in some other sectors of the economy like oil and gas happen in arithmetic progression, same size investment in housing and infrastructure provision comes in geometric progression, thus creating jobs in multiples of 10s and 100s.
This is a latent opportunity to save and grow the economy and we are of the view and conviction that the time to activate that opportunity is now.
