The 300-percent growth in the value of investment expected to happen in the construction industry in Nigeria by 2021 has been hinged on the effective implementation of the Local Content Bill now in its second reading on the floor of the House of Representatives.
Expectation is high among industry players that by 2020 Nigeria, alongside India, will enjoy higher growth rates than notable nations such as China. This is as the contribution and impact of the construction industry to the economy are witnessing significant growth and have become a veritable index in employment generation for both skilled and unskilled labour in the country.
For too long, foreign construction firms have been dominating the construction market in Nigeria and they often source equipment, materials and even labour from their own home countries. As a result, local contractors, consultants, material and equipment suppliers, and workers often do not benefit from the investment in the construction sector.
The Local Content Bill is, therefore, seeking an Act for the involvement of local enterprises and labour in planning, design and construction services as well as the locally added value in transactions occurring throughout a contract’s supply chain.
The local construction industry in Nigeria has suffered slow growth as a result of the non-application of local content in the industry. According to Solomon Ogunbusola, president, Federation of Construction Industries (FOCI), the situation is such that the industry’s contribution to Gross Domestic Product (GDP) is as low as 3.2 percent.
Bode Adediji, former president of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), who blamed the slow growth on a combination of factors, explained that the domination of the industry by foreign firms was caused by local operators who lack foresight and ability to synergise for growth.
Michael Beylouny, managing director, Lambert Electomec, who corroborated Adediji, said, however, that “in future, we expect more global integration within the construction industry”.
Beylouny said the slow growth in the industry was caused by macro-economics, government spending, oil and gas contracts being stalled, and security issues, adding that all these were affecting foreign investments, just as lack of vision, medium or long-term investment also slowed the growth of the industry.
Ogunbusola of FOCI contended that the state of the nation’s economy had somewhat overstretched his members as they tasked themselves to meet up with contracts awarded to them at various levels.
He added that these members were operating under serious constraints including high indebtedness by different governments, while expressing hope that the expected growth in the industry would be driven by the Federal Government’s transformation agenda which, he noted, had seen infrastructural development in various parts of the country.
“The growth in our members’ investment value will be driven by the Federal Government’s transformation agenda. The government is doing a lot of transformation and in the construction industry, we are not just talking about road construction, we are also talking about transformation in rail and air transport,” the FOCI president said.
Ogunbusola said that no government had invested more in infrastructure provision, especially roads, than the present government under President Goodluck Jonathan.
“If you go to the far north, you will see massive investment in roads and rail infrastructure. In the construction sector, most of the roads in the eastern and northern parts of the country are being dualised. As all these are going on, some of our 125 member-industries, especially the big ones like Julius Berger, Dantata, PW, etc, are getting involved and if it goes on like that, I am sure by 2021, their investment value will triple,” he said.
Chuka Uroko
