How The Construction Industry Was Developed In Nigeria

Nigeria is one of the fastest-growing economies in Africa, thanks to growth in various sectors. The construction industry is one of those responsible for the high growth rate in the West African nation. It boosts infrastructural development and is also a major source of youth employment opportunities. 

Statistics show that the construction industry will grow by over 4% in 2021, following the slowdown in pandemic cases and its corresponding restrictions and effects. The sector largely runs on several construction suppliers like Dangote Cement and Construction companies like SANA Group in Lagos. 

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When Did Construction Companies Start Operations In Nigeria?

Construction company operations in Nigeria date back to the 1940s. They provided several job opportunities to the community. However, the growth rate was still pretty slow at the time, even with a few foreign players in the market.

However, after independence in 1960, Nigeria experienced an “oil boom”. The government set up favorable policies to promote investment as well. Due to oil production prospects, many foreign investors entered the market and invested in infrastructure. 

Likewise, local construction companies sprung up and claimed a larger share in developing infrastructure. Collaborations with international firms improved the quality of output since they fostered more advanced technology and highly qualified teams.

These investments boosted the construction industry that then created faster economic growth.

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Features Of Construction Companies In Nigeria

Nigeria’s construction industry has various components that facilitate its residential, commercial, and industrial projects. It also attracts many foreign investors, who now focus a lot on real estate due to good returns on investment.

Nonetheless, the major sections of Nigeria’s construction industry include:

1. The Building Materials Sector

This sub-sector has grown rapidly in the past decade, with many companies popping up to provide quality building materials for the industry. Some major players, among others, include:

  • Dangote Cement
  • Nigerite
  • Kovarite
  • Lafarge Africa

2. The Construction Equipment Sub-sector

Due to the increasing number of construction projects, demand for equipment is at an all-time high. Machinery and tools like graders, dumper trucks, excavators, etc., continue to be in demand.

Most of the equipment is imported from abroad, from the US, China, and Germany, with local firms such as SANA ME acting as suppliers.

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Key Factors For The Growth Of Construction Companies In Nigeria

Nigeria witnessed tremendous growth in the last two decades. Like other sectors, however, it also took a hit from the effects of the 2020 global pandemic and its corresponding restrictions. 

Nonetheless, it is picking up in 2021, with experts predicting a steady rebound. The industry has grown steadily over the years due to the following reasons.

1. Economic Diversification 

The steady growth of multiple sectors has been a major boost for Nigeria’s Construction industry. The country has enjoyed an average growth rate of between 2% and 3% yearly since 2000 due to multiple industries like oil and gas, entertainment, tourism, among others.

Development in these areas encourages infrastructure, which consequently enables the growth of the building industry.

2. Good Commodity Prices 

The strong commodity prices in Nigeria opened the gateways for many companies to set up their operations in Nigeria. Such conditions have attracted even more foreign actors to set up construction companies, especially in major cities like Abuja and Lagos.

More industries mean more infrastructure, thus boosting the building industry growth in the country. Financial experts already suggest that oil prices would remain strong in the long term, which creates an even more promising environment for this trend to continue. 

3. Availability Of Materials

Before 2013, the country faced a shortage of steel, cement, and other materials. However, since then, multiple companies have filled this void and worked together with the government to increase production. As a result, the building industry in Nigeria resumed its steady growth pattern.

4. Public And Private Partnerships 

Nigeria’s business policies greatly encourage both local and foreign investors, which has bolstered great partnerships. Intra-industry collaborations lead to better quality outputs since they can acquire better technology and skilled personnel. Such a trend has greatly contributed to Nigeria’s construction industry. 

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What Are Some Challenges Faced By Construction Industries In Nigeria?

Like other industries, the construction industry has undergone several challenges during its development. Some of these include: 

1. Inadequate Funding And Financial Policies

Most upcoming companies in the construction sector suffer from limited funding available to them. The industry carries high barriers to entry that could be unbearable to smaller construction companies, especially in cities like Lagos.

Furthermore, fiscal policies passed in recent years have taken a toll on construction industry players by increasing operational costs for some of them. For local investors, chances of getting government grants and bank loans are often pretty low as preference goes to foreign-backed firms. 

2. Corruption 

In Nigeria, government organizations are often in charge of big building projects. They call upon private construction firms to do the work for which they have to bid. Given the corruption that thrives within the government and major corporations, these lucrative jobs typically go to a select few.

This trend breeds various problems, especially when better firms miss out on projects because they do not have the connections to take them on. It fosters an uneven playing field within the industry. 

3. Poor Quality Control 

A large portion of the construction industry is greatly affected by poor quality control. This issue is largely due to corruption, inadequate funding, especially for government firms, negligence, among others.

Personnel in many cases do not do their due diligence, causing adverse effects like poor quality structures that lead to construction accidents and the like. Such occurrences cause irreparable damage to many firms in the sector. 

In Conclusion

The construction industry in Nigeria has grown steadily over the years and will continue to do so. The development climate and favorable government policies are largely responsible for this. However, a few factors may continue to slow down this industry if not checked.

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