• Thursday, December 07, 2023
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BusinessDay

Enabling growth of local construction firms

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One of the surest indicators of growth in any economy is the construction industry where the rise and fall of cranes at construction sites shows economic wellbeing. The industry is such an important aspect of the economy that in developed economies, it makes a significant contribution to the Gross Domestic Product (GDP).

In Nigeria, there has been a phenomenal growth in the industry which is understandable given the country’s large and growing population coupled with huge housing and infrastructure deficit that runs into millions of units and trillions of naira, respectively.

Construction growth in Nigeria, according to a10-year forecast by Global Construction Perspectives and Oxford Economics, will be the fastest of all markets. The forecast notes that China will overtake US as the world’s biggest construction market by 2018, but the fastest growth will happen in Nigeria. The country, it says, will be a ‘global hotspot from here to 2020’, noting that the nation’s construction growth is even faster than India’s.

In all these, however, local construction firms are hardly in the picture, hence their slow and stunted growth, making little or no contribution to GDP. The reasons for this are not far-fetched.

Whereas Bode Adediji, president of the Nigerian Institution of Estate Surveyors (NIESV), blames the slow growth of local firms on lack of capacity for expansion, Ibikunle Ogunbanyo, former president of Association of Consulting Engineers of Nigeria (ACEN), locates the problem in policy issues. Mobolaji Williams of the Federation of Construction Industries (FOCI), for his part, says the industry is not growing because of foreign construction firms’ domination and government’s failure to meet its financial obligations to contractors.

Ogunbayo explains that policy issues are responsible for government’s poor investment in housing, adding that the same problem is responsible for lack of local content in the construction industry as obtains in the oil and gas industry.

We are pained by the plight of local construction firms in a country with all the potential to realise the predictions by Global Construction Perspectives and Oxford Economics.

Simple policy issues and the political will to implement such issues by government can make this happen.

The construction industry creates jobs and, through the multiplier effects of job creation, generates wealth for the country and the people. We strongly believe that the multiplier effect of investment in terms of job creation is higher in construction than any other sector, because if $100 million is invested in the oil industry, it may employ just 100 people, but if the same amount of money is put into the construction industry, it will employ about one million people, because it will create direct and indirect jobs for both skilled and unskilled labour, including manufacturers of building materials, carpenters, welders, builders, and even food vendors.

We urge the government and even private sector operators to patronise local firms by giving them jobs because that is the only way to make them grow. The local firms, on their part, should synergise in order to build capacity which is an edge the foreign firms have over and above them. Embracing international best practices in construction is also critical for the local firms because shoddy jobs arising from non-compliance to quality assurance, standards and specifications are the major causes of distrust and crisis of confidence in local firms, hence foreign firms are preferred.