Introduction
Nigeria’s development is intricately tied to the strength of its physical infrastructure, which is heavily reliant on a thriving construction industry. The sector’s importance cannot be overstated, as roads, bridges, schools, hospitals, and other critical facilities all depend on its success. Despite its central role, the construction industry contributes a mere 4-9% to Nigeria’s GDP. Recent statistics highlight the sector’s underperformance, with a 4.0% GDP contribution in Q1 2024 and 9.4% in 2022. Comparatively, countries with similar populations typically see construction contributing 10-15% to their GDP, underscoring the sector’s potential for growth. Structural inefficiencies, underinvestment, outdated practices, and limited local capacity are significant barriers preventing the industry from realizing its full potential. To address these challenges, rebuilding the sector is essential. This would not only increase the sector’s contribution to GDP but also create much-needed jobs, improve living standards, and enhance Nigeria’s global standing in infrastructure development. By prioritizing the construction industry’s growth and addressing its challenges, Nigeria can unlock new opportunities for economic advancement and development. Ultimately, the sector’s success is crucial to the nation’s overall progress and prosperity.
Construction Industry Overview
The construction industry plays a vital role in developing and maintaining physical structures, encompassing a broad range of activities from designing and building to maintaining residential buildings, roads, bridges, railways, energy facilities, and public infrastructure. In developed economies such as the United States, Germany, the UK, and Japan, the construction sector operates with remarkable efficiency, driven by several key factors. These include the adoption of advanced technologies like Building Information Modeling (BIM), drones, robotics, and prefabrication, which enhance precision and productivity. Strong regulations and building codes ensure compliance and safety, while reliable long-term financing enables projects to proceed without interruption. A skilled workforce, supported by continuous training, is another hallmark of these countries’ construction industries. Transparent procurement systems and high safety and quality standards further contribute to the sector’s success, resulting in projects that are delivered on time, within budget, and to high-quality standards. This, in turn, creates significant GDP and societal value.
In contrast, Nigeria’s construction sector, despite its size and growth potential, faces numerous structural limitations. These include limited financing options and high capital costs, a heavy reliance on imported materials and equipment, low adoption of modern construction technologies, a shortage of skilled labor, and weak regulatory enforcement and governance.
As a result, projects in Nigeria often experience delays, cost overruns, and abandonment. The dominance of international companies in Nigeria’s largest projects is largely due to their superior capital, advanced machinery, global experience, and technical capacity. Local firms, while demonstrating resilience and gradual improvement, often struggle to compete due to insufficient resources, technical expertise, and project management capabilities. This performance gap is a significant contributor to the sector’s low GDP contribution, despite its critical importance to nation-building. To maximize the sector’s economic impact, local firms must prioritize upgrading their technology, skills, and management practices. By doing so, they can bridge the gap with international competitors and play a more significant role in driving Nigeria’s economic growth and development. Key Players in Nigeria’s Construction Industry. Nigeria’s construction ecosystem consists of both Indigenous and international companies, each contributing differently to the industry’s growth and standards:International Construction Companies in Nigeria. Company Name, Year of Incorporation(Nigeria Operations)OriginLeadership(Managing Director)Sector of DominanceLandmark ProjectsJulius Berger Nigeria Plc, 1965, Germany, Foreign, Roads, bridges, buildings Abuja Airport, Third Mainland Bridge, Abuja Stadium. etcChina Civil Engineering Construction Corporation (CCECC)1981ChinaForeignRail, roads, bridgesLagos–Ibadan Railway, Abuja-Kaduna RailwayReynolds Construction Company, RCC 1969LebanonForeignRoads, highways, bridgesObafemi Awolowo University, Lagos-Ibadan ExpresswayArab Contractors Nigeria Ltd 1991EgyptForeignRoads, buildingsAbuja Wuye District Infrastructure, New Sokoto State Government House Costain West Africa Plc 1948UKLocalBuildings, civil worksAhmadu Bello Stadium, NECOM HouseSaipem Nigeria Ltd1967ItalyForeignOil & gas EPCNigeria LNG Train 7, Bonga North DeepwaterCappa & D’Alberto 1950ItalyForeignBuildings, civil worksTafawa Balewa Square(TBS), African Medical Centre of Excellence AbujaITB Nigeria Ltd1995LebanonForeignHigh-rise building constructionEko Atlantic TowersSetraco Nigeria Ltd1977LebanonForeignRoads, bridges, highwaysZaria-Funtua-Sokoto Dual Carriageway, Boro Bridge
Indigenous Construction Companies in Nigeria
Company Name
Year of Incorporation / Nigeria Operations
Origin
Leadership(Managing Director)
Sector of Dominance
Landmark Projects
Dantata & Sawoe
1976
Nigeria
Nigeria
Roads, bridges, public works
Federal Highway Road Construction
Construction Kaiser
1993
Nigeria
Nigeria
Building construction
Nigerian British Chamber of Commerce
Halliburton
Sahara Energy
Formwork Ltd
1993
Nigeria
Nigeria
Building support systems
Abia Mall in Umuahia Abia State,
Owerri Mall Imo State,
Asaba Mall Delta State
Megastar Technical & Construction
1997
Nigeria
Nigeria
High-rise & luxury buildings
Federal Polytechnic Ekowe Bayelsa State,
Negris Turbo machine
Interkel Group (Nigeria)
1987
Nigeria
Nigeria
MEP + building
British Council,
Embassy of the United States,
French Embassy
Blueline Urban Projects
2003
Nigeria
Nigeria
Luxury residential buildings
Price Waters coopers (PWC)
Discovery Gardens Lekki
House on the Rock Church
Brickhouse Construction Ltd
1989
Nigerian
Nigeria
Structural works
9-storey Reddington Hospital Complex on Idowu Martins St, Victoria Island, Lagos
Dutum Company Ltd
1989
Nigerian
Nigerian
Civil works, buildings
Imeh tower Lagos state, Makarios Luxury City
Craneburg Construction
2016
Nigerian
Nigeria
Roads, highways, public infrastructure
Mojoda-Ijebu Road,Owerri Orlu Road
Key Issues Holding the Nigerian Construction Industry Back
Several factors limit the sector’s growth and GDP contribution:
– Underinvestment: Insufficient government and private sector spending on infrastructure hinders the construction industry’s growth, limiting its potential to drive economic development and meet the country’s infrastructure needs.
– Policy inconsistency and regulatory inefficiency: Delays, weak enforcement, and corruption hinder project execution, discouraging investment and increasing costs, ultimately affecting the industry’s overall performance and GDP contribution.
– High cost of materials and import dependence: Heavy reliance on imported materials like steel, cement, and equipment raises project costs, making construction more expensive and less competitive, which negatively impacts the industry’s growth and development.
– Limited access to long-term financing: Banks’ short-term loans with high interest rates restrict project scale, limiting the industry’s potential for growth and development, and making it challenging for contractors to execute large-scale projects.
– Low technology adoption: Minimal use of advanced technologies like BIM, drones, robotics, and prefabrication reduces productivity and quality, making the industry less competitive and efficient, and limiting its potential for growth and innovation.
– Skills shortage and weak local capacity: Shortage of certified engineers, technicians, and digital construction experts limits local firms’ competitiveness, making it challenging for them to execute complex projects and compete with international companies.
– Poor infrastructure logistics: Bad roads, congested ports, and inefficient transport systems increase construction costs, cause delays, and reduce the industry’s competitiveness, ultimately affecting the country’s economic development and growth.
– Project abandonment culture: Thousands of incomplete projects waste resources and economic potential, eroding public trust and discouraging investment in the industry, and ultimately affecting the country’s economic growth and development.
These combined structural, financial, technological, and capacity challenges directly reduce GDP contribution and slow national development. These also explain why local firms struggle to compete with international players, limiting the industry’s overall impact on the economy.
Way Forward and Solutions to Rebuild the Sector
To maximize economic contribution and support nation-building, Nigerian construction firms and stakeholders should focus on:
Technology and Innovation
Adopt Building Information Modeling (BIM), drones, robotics, AI project management, and modular construction.
Digitize procurement and monitoring to improve efficiency and transparency.
Capacity Building and Skills Development
Invest in vocational and technical training programs, which will strengthen the competency and Certification of engineers, project managers, and technicians.
Promote knowledge transfer through partnerships with international firms.
Financing and Investment
Expand public-private partnerships (PPPs) and infrastructure bonds.
Facilitate long-term project financing at competitive rates.
Regulatory and Governance Improvements
Strengthen building codes, safety standards, and enforcement.
Streamline procurement and reduce corruption.
Local Content and Materials
Increase use of locally manufactured cement, steel, and fittings.
Encourage Nigerian firms to take lead roles in major projects.
Collaboration and Partnerships
Foster partnerships between local and international firms.
Encourage universities and training centers to align curricula with industry needs.
Benefits to Stakeholders
Government:
Faster infrastructure delivery
Increased tax revenue
Stronger national economic growth
Local Construction Firms:
Greater competitiveness
Access to larger, higher-value projects
Improved capacity and long-term growth
Citizens and Communities:
Better housing and public infrastructure
Job creation and skills development
Improved quality of life
Investors and Developers:
Higher project reliability
Better returns on investment
Reduced construction risk
Conclusion
Nigeria’s construction industry plays a vital role in nation-building, yet its economic performance falls short. The sector’s low GDP contribution is a symptom of deeper systemic issues, including underinvestment, weak local capacity, outdated technology, and governance challenges. To unlock the industry’s full potential, a comprehensive overhaul is necessary. This can be achieved through the adoption of modern technologies, development of a skilled workforce, reform of financing mechanisms, strengthening of regulatory frameworks, and implementation of local content policies. By transforming the construction industry into a modern, competitive, and inclusive sector, Nigeria can unlock significant economic benefits, accelerate national development, create jobs, and improve the quality of life for millions of Nigerians. Ultimately, a revitalised construction industry can drive economic growth, enhance infrastructure, and contribute to the country’s overall prosperity. With the right strategies and investments, Nigeria’s construction industry can realise its full potential and play a more significant role in shaping the country’s future
By: ESV. Babatope O. Fasunloro is a Principal Partner at Olusegun Fasunloro & Associates an Associate Member of the Nigerian Institution of Estate Surveyors and Valuers with Membership M03755, RICS Member
Phone Number: +234 8168392039. Email: tope@ofandaafrica.com
Office Address: East Wing, WW16 TBS Complex, Lagos Island, Lagos State
