By Jude Njoku

The free fall of the Naira against the US Dollar has unsettled the nation’s fledgling construction industry and created an atmosphere of uncertainty which is scaring potential investors away from the sector regarded as the barometer for measuring the nation’s economy.

These views were canvassed by built environment experts who spoke to Vanguard Homes & Property in separate interviews.

The Registrar, Quantity Surveyors Registration Board of Nigeria, QSRBN, Mr Godson Moneke, Immediate past Chairman of the Lagos State chapter of the Nigerian Institute of Quantity Surveyors, NIQS, Mr Olayemi Shonubi and the President of the Building Collapse Prevention Guild, BCPG, Mr Kunle Awobodu were unanimous in calling on the Federal Government to save the sector from total collapse by taking urgent steps to shore up the value of the Naira against major world currencies. They also called of an increase in the budgetary allocation to capital projects as this is the only way of boosting activities in the sector.

Awobodu who is a a former chairman of the Lagos State branch of the Nigerian Institute of Building, NIOB, noted that when a nation’s currency suffers serious depreciation, it will impact negatively on the economy and this will reflect on all sectors including the construction industry”.

 High cost of imported building materials

Explaining that most materials used in the building and construction industry are imported, Awobodu noted that the devaluation of the Naira has jerked up the prices of imported construction materials . What this means is that projects under construction will have their contract sums reviewed upwards due to obvious inflationary trends.

He posited that even the prices of locally produced building materials like cement have gone up. “The reason is because the cost of maintenance has gone up. Although Nigeria has abundant supply of limestone, most of the spare parts for the plants are imported. Gypsum which is one of the raw materials used in cement production is still being imported,” he said, adding that these factors have reflected on the cost of cement.

“Beyond this, workers will also agitate for increase in their salaries because the present pay packet is no longer sustainable. The cost of production will rise and those who had the intention of embarking upon new projects will suspend it. The result is a reduction in the tempo of construction activities,”he said.

The saying that one man’s meat is another man’s poison may be playing out according to Awobodu. He opined that those living abroad who intend to embark on new projects will celebrate the present scenario because they will spend less to actualise their projects. “If they had planned to spend $5000, they may end up spending $4000, “he said

 Stagnancy

His views were corroborated by Mr Shonubi who opined that the consistent devaluation of the Naira and the fall in the price of crude oil, have stalled further developments in the country. Mr Shonubi stated that the cost of construction has gone up because most building materials – tiles, sanitary fitting, electrical fittings and furnishings are imported.

“You will recall that last year, Dangote Cement Plc announced a price reduction for its various grades of cement. But what is happening today? The price of cement has gone up since the devaluation of the Naira to about N1,800 per 50kg bag,”he said, adding that no sensible developer will embark on new developments with the situation on ground.

“Go round the country, hardly can you see any new developments springing up. Everything appears to be stagnant because nobody is sure of when the Naira will pick up. The government is not helping matters. As we speak, the budget has not been passed into law and until this is done, no major construction activity can take place because nobody knows the policy thrust. The government is not ready to fund the economy because it is only through capital expenditure that the economy will grow. A situation where a very large percentage of the budget estimates is devoted to recurrent expenditure is not healthy for the economy,”he said.

On his part, Mr Moneke described the present scenario as a storm in the tea cup because the Naira will pick up affect the general elections when politicians who are allegedly buying up all the dollar will release them. “If the Naira recovers quickly, things will normalise. What is happening is like a storm in the tea cup, except the government doesn’t do enough to restore confidence in the economy. There is no cause for alarm because the domestic economy is relatively stable.

It is only the foreign components that are affected and this is largely artificial. My projection is that three months after the elections, when there is calm, the Naira will pick up. I foresee only a slight adjustment of not more than 20 percent,”he said. Moneke also expects the price of crude oil to rise to $70 a barrel.