A real estate investment and development company, Octo5 Holdings Limited, says the construction and real estate sectors of the Nigerian economy have the potential to trigger an increase in the country’s GDP by 25 percent from 2023 through 2024.
The company based its projection on expectations that Nigeria’s incoming administration would implement a robust economic recovery agenda.
The company also expects the new administration to promote rapid urbanisation and introduce innovative solutions to boost economic productivity, especially for the country’s growing youth population.
“Considering Nigeria’s strong fundamentals and large market, an economic course correction is inevitable, although it may come with initial challenges,” Babajide Odusolu, Octo5 CEO, said.
Odusolu hopes that the expected restructuring and consolidation of agencies like the Federal Housing Authority (FHA), Federal Mortgage Refinance Corporation (NMRC), Federal Mortgage Bank of Nigeria (FMBN) and the Family Homes Funds (FHF) will promote housing development and ease home ownership for Nigeria’s workforce.
In a recent report tagged ‘The Octo5 Economic and Real Estate Outlook’, the company says Nigeria can exceed the International Monetary Fund’s (IMF) 3.2 percent projected growth rate by increasing public construction and providing fiscal incentives to the private sector to develop new urban nodes across the country.
The report also provides insight into Nigeria’s global economic outlook, highlighting the challenges posed by the country’s reliance on imported finished products which the global energy crisis has further exacerbated.
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Adewole David, the company’s research manager, explained in an analysis of the report that the country’s reliance on imported finished products has resulted in increased funding for petrol subsidies and higher diesel prices.
“Businesses relying on diesel for electricity have experienced elevated production costs. This report highlights that the cost of production, primarily building materials, witnessed significant spikes due to a weaker currency and CBN’s attempts to regulate foreign exchange,” he said.
“The ongoing realignment of Brazil, Russia, India, China, and South Africa, also called BRICS Nations, in which we anticipate Nigeria to play a significant role, coupled with the Sudan conflict and unrest in the Sahel region, as well as the emerging economic conflict between China and the United States, presents Nigeria with an opportunity for a focused and Africa-centered renaissance,” he added.
David anticipated that construction and urban renewal would be catalysts for job creation, wealth generation, and economic growth. He also envisioned vocational skills development playing a vital role in youth employment, with well-structured paid internship programmes managed by the organised construction industry in collaboration with certified training institutions.
He noted that while the International Monetary Fund (IMF) has predicted a 3.2 percent rise in the Nigerian economy, it is expected that Nigeria could exceed this projected growth rate by increasing public construction and provision of fiscal incentives to encourage the development of new urban nodes across the country using private capital.
It will be recalled that both the construction and real estate sectors contributed N20 trillion to the GDP in the first three quarters of 2022. Octo5 projects that the sectors will surpass last year’s contribution, expecting it to rise to N28 trillion
The report listed some of the hubs projected for residential development as the FCT Abuja, Lagos (Epe and Agbado Axis), Lagos/Ibadan Expressway, Port Harcourt, Uyo, Kaduna and Kano. “We also anticipate prospects for the development of agro-tech and mechanised industrial hubs in Oyo, Ebonyi, Benue, Ogun, Kebbi and Anambra states,” David said.
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