Nigeria's Construction Industry Needs Deliberate Policymaking, Collaboration to Curb Capital Flight

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November 24, 2021 / 11:00AM / OpED by  Temitope Runsewe / Header Image Credit: Temitope Runsewe

 

The numerous challenges plaguing the Nigerian construction sector can be resolved through focused policymaking and increased industry collaboration if the sector is to spur GDP growth according to Mr. Temitope Runsewe, MD, Dutum Company Ltd. He was speaking at the ongoing West African Property Investment Summit taking place in Lagos between the 23rd and 24th of November, 2021.

 

Runsewe said there is a need for fundamental policy changes to support indigenous construction companies so they can improve capacity to deliver projects. This would create an enabling environment for Nigerian players in the sector to compete favourably and stop capital flight, he said.

 

Speaking on the critical nature of the construction and property sector to Nigeria GDP, Runsewe said "It is important that indigenous construction service providers receive the support of the government so that we can grow. That support should give us opportunities and funds that can make us compete because if we are not able to compete with the foreign companies, how do we grow?"

 

He drew attention to the ongoing practice where major construction projects are awarded strictly to foreign firms saying; "Foreign companies come with funds at 0%, 1% while local service providers either cannot get the funds or when we do, we are getting it at 30% and above per annum. You can see that it is a struggle to compete."

 

A cursory look at some 69 road projects awarded in 2018 by the Federal Government across the south-east region showed that the total value of contracts awarded to foreign construction firms was 568 billion Naira (N568,100,252,121.53) while the value of what was awarded to Indigenous construction firms was a measly 66 billion Naira (N66, 045,289,911.81).

 

Runsewe called on the government to be deliberate in creating policies for the construction sector, saying implementation and enforcement of policies constitute major challenges impeding the growth of the sector. According to him, unlocking the construction sector would have a ripple effect on GDP.

 

"When you give a local construction company a new project, the money stays here for the most part, gets recycled and results in GDP growth. But when you continue to give the biggest projects to the foreign companies, they do their bit and take the rest of the money out, so we are having capital flight," he said.

 

Also speaking on the role of policy making, Mrs Jumoke Adenowo, Principal Partner at AD Consulting, said there has to be incentives to protect the various players in the construction ecosystem. "We need to begin to look at policy solutions from a holistic perspective if we are to see any impact" she said.

 

On the role of the construction industry in this regard, both Adenowo and Runsewe urged the private sector to come together and look beyond profit to legacy so the industry can compete favourably as a group and support the next generation of leaders that will save income for the nation. Examining the impact of COVID-19 on the construction and real estate sector, they said it has shown how easily things can be disrupted and why collaboration now more than ever is required.

 

Proshare Nigeria Pvt. Ltd.

 

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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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