Construction as an economic activity is a growth enabler given the quantum of jobs it can generate at a time and the multiplier effect of those jobs on individuals, households and the economy.
Whether it is the construction of roads, rails and bridges, or real estate activities involving the building of residential houses, commercial facilities such as offices, retail outlets and hotels, a good number of jobs are generated, engaging skilled and unskilled labour.
While one kilometre of road construction can employ over 30 skilled and unskilled workers, it is even more in real estate. It is estimated that every one square metre of real estate activity generates three jobs. In other words, a 1,000 square metres guarantees about 3,000 jobs.
More direct jobs are created through construction, meaning that the country has to catalyse more activities in that sector for more jobs to be created, more people empowered economically and poverty level and prevalence reduced significantly.
Analysts reckon that while the multiplier effects of investment in some other sectors of the economy like oil and gas happen in arithmetic progression, the effect of a similar amount of investment in housing and construction is in geometric progression, thus creating jobs in multiples of tens and hundreds.
Infrastructure, chiefly good roads network and rails for mass transportation, is critical. Therefore, for a country like Nigeria that needs to lift millions of its citizens out of poverty through increased economic activities that stimulate employment, construction, especially real estate, should be given adequate consideration. The challenges impeding growth in the sector have to be addressed for this to happen.
Unarguably, the construction industry in Nigeria has great growth potential which is reflected in a 10-year forecast from Global Construction Perspectives and Oxford Economics, which notes that growth in the industry will be faster than other sectors of the economy.
The forecast notes further that while China may overtake the US as the world’s biggest construction market, the fastest growth is projected to occur in Nigeria. It considers the country as the ‘hotspot’ for construction activities up to 2020.
Apart from infrastructure, investors in real estate, for instance, 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 with a view to expunging Governor’s Consent which is a big obstacle to ease of property registration in the country.
Leveraging opportunities in this sector serves dual purposes of providing shelter and creating jobs which lead to wealth generation. The rebasing of the country’s GDP a few years ago revealed that this sector is about 40 percent larger than what it was thought to be and, from the rebasing too, the sector was discovered to be the fastest growing and the sixth largest in the economy.
Nigeria has an estimated 200 million square metres of real estate (residential, commercial and industrial) but most it is either under-developed or in a poor state. Investment in housing, for instance, can keep up with number of people moving into the cities.
For a country like Nigeria looking to lift over 100 million of its citizens out of extreme poverty opportunities in the construction industry can’t be ignored. No effort should be spared by government to create the enabling environment for private sector operators to invest in infrastructure, generate more jobs and grow the economy.