FG’s economic sustainability plan at risk as cement prices soar

The soaring price of cement in the building materials market is one singular reason federal government’s economic sustainability plan (ESP) packaged by the Vice President Yemi Osinbajo committee may head for the rock.

ESP is government’s response to the hash impact of coronavirus pandemic on both global and national economies. The plan which, among other things, seeks to reflate the economy by creating economic activities through building and construction aims to deliver social housing and create jobs.

President Muhammadu Buhari, early last year, approved N2.3 trillion for the plan, part of which would be deployed to building 300,000 units of social housing for low income earners in each of the six geo-political zones of the country, and also for constructing rural roads.

But this plan which anticipates 1.8 million jobs to be created through increased activities in building and construction may end of a mere pipe dream with the soaring cost of cement which has increased by over 80 percent to N4,500 per 50kg bag, up from N2,500 it sold for about three months ago.

“Cement is the king of all input materials for building houses and constructing roads or bridges. At N4,500 per bag, builders will find it hard to deliver housing at affordable prices. Government is planning to build social housing that will be going for N1.8 million and N2million, depending on the house-type. We can only wait and see how this plays out at the prevailing cement price,” Johnson Chukwuma, a civil engineer working with a construction firm, noted.

Though cement manufacturers are reported to be offering a discounted price for the commodity in respect of the social housing initiative, Chukwuma said it was a wrong approach to dealing with a crisis, describing the move as a cosmetic solution.

ESP was hailed by real estate stakeholders not only because of its expected capacity to reduce the country’s housing deficit, but also for its high impact on the economic and social life of the people.

“Many countries have embarked on construction activities as a means of stimulating economic activities because they produce dual impacts on the economy,” said Frank Okosun, managing director and chief executive officer of Knight Frank Nigeria in an interview.

He explained that during the actual construction period, construction provides jobs, thereby putting cash into the hands of citizens who onward distribute it as they purchase other goods and services they require for living.

He added that the final products which may be houses, roads, bridges etc. will further improve the lives of the people who use them. Hence, this is a welcomed plan, which needs to be meticulously implemented.

Building 300,000 housing units, Okosun reasoned, was no small feat as it has the potential to turn the entire country to one big construction site. He urged the federal government to ensure that this initiative succeeded.

In what looked like a show of commitment to the sustainability plan, the office of the Vice President recently issued a statement, updating the public on government’s actions on the 300,000 housing initiative.

“More than 20 states, including the Federal Capital Territory (FCT), have already expressed interest in the programme, including others which have offered free land for the construction of the houses,” the statement disclosed.

Some of the states that have already supported the implementation of the scheme, which will offer houses at low prices of between N1.8million and N2million include the Osun, Ogun, Enugu, Delta, Bauchi, Kebbi, Nasarawa, Plateau, and the Federal capital Territory (FCT), where the first set of construction sites have been indicated.

Others like Abia, Anambra, Ebonyi, Imo, Cross River, Sokoto, Kaduna, Zamfara, Katsina, Borno and Yobe states are working towards joining.

“Under the ESP Social Housing Plan, 300,000 low cost houses would, by itself, create 1.8 million jobs in the housing sector and beyond, while as indicated under the ESP approved by the President and the Federal Executive Council, the Central Bank of Nigeria has committed N200billion facility for the Social Housing.

“To achieve these goals, the Family Homes Funds has been appointed as the implementing agency for this initiative and it will construct 300,000 housing units across the country,” the statement added.

According to the statement, to kick-start the social housing projects, the CBN is committed to a N200 billion facility and most of the sites where the housing project will start have been identified across various geo-political zones by the federal government.

Get real time updates directly on you device, subscribe now.