By Jude Njoku
The financial crunch which has made it impossible for indigenous contracting firms to thrive in Nigeria can only be dealt with if the Federal Government and the Central Bank of Nigeria (CBN) approve the licencing of an industry-friendly Construction Development Bank. This view was canvassed by the President of the Association of Professional Bodies of Nigeria (APBN) and facilitator of the move to set up a National Construction Development Bank, Mr Joseph Segun Ajanlekoko and the President of the Federation of Construction Industry (FOCI), Engr Wiiliams
Ajanlekoko who is leading the seven built environment professional bodies to ensure that the specialised bank is licenced, explained that the glut which the real estate sector is presently going through could have been averted if theBank had been licenced by the regime of former President Olusegun Obasanjo. But his economic advisers and the Central Bank of Nigeria (CBN) allegedly scuttled the dream of getting the specialised bank of stream because they insisted that the promoters must satisfy all the conditions spelt out by the apex bank for licencing commercial banks.
The APBN boss who was the President of the Nigerian Institute of Quantity Surveyors (NIQS) when he initiated the move to set up the bank explained that it would have given fillip to the distressed real estate sector by providing funds.
This optimism arose from the fact that the interest rate charged by the Construction Bank would be very low compared with what commercial banks are presenting charging. “If you are doing it with single digit, why will you not have enough construction activities? Why will there not be houses being built? A real estate developer said recently that they were getting money at 28%. You can never build or house your people with that kind of cost or interest margin. It is not possible,” he said.
Speaking from the contractors perspective, Engr Williams noted without equipment, indigenous contractors cannot succeed. “If somebody is building your house and he doesn’t have a mixer, how is he going to effectively perform if he has to go outside and hire a mixer that will work today and not work tomorrow or you have a construction work and somebody does not have an excavator or a bulldozer or a roller or compactor to do the job. The limitation of most of our indigenous contractors is based on the equipment availability to assist them in doing the job. That’s why FOCI and the other organisation some years ago, tried to get the Federal Government to set up a Construction Development Bank to assist in financing the equipment required for the development of the construction industry in Nigeria. That Bank is yet to take off as we speak and as at last week, we still discussed this and we are still working on it. It takes time for things to happen in Nigeria but this organisation will continue to fight until when we get that done,” he said.
Continuing, the FOCI boss declared: “We don’t want a situation where the indigenous contractors are given a job and they don’t have the equipment to do them. Some members of the National Assembly even said at that time, that okay, granted that it is equipment, can’t we give the job to the indigenous contractors and they go to the big ones to hire the companies. These companies are not in equipment hiring business. The equipments are sourced for them from their home funds to do their jobs and when you are now hiring it out, who is going to be in control of it? It costs a lot of money; an excavator for example is an average of about N250,000 per day and you can imagine how many you see on the road when road construction is going on.