By YINKA KOLAWOLE

The organised private sector (OPS) has enumerated the challenges that confronted the construction and real estate sector of the Nigerian economy in the second quarter of 2012.

Speaking at a press conference to review the performance of the economy in the second quarter of the year, President of the Lagos Chamber of Commerce and Industry (LCCI), Mr. Goodie Ibru, noted that the sector was mainly impacted by issues relating to macro economic variables and the operating environment for business.

“The challenges of the operating environment for business intensified in the second quarter. Across all sectors, there were concerns over weak consumer demand reflecting the general down turn in the economy. Structural and institutional problems persisted as well,” he stated.

Ibru lamented that the downturn in the economy could not make the construction industry fulfill its potentials of job creation. According to him, “the construction industry has very profound potentials to create jobs. But the recent downturn in the economy has taken its toll on this sector. More importantly however, there are other specific challenges highlighted by the operators in this sector in the last quarter.”

He listed the challenges facing the sector to include: High cost of building materials- cement, iron rods etc; Low indigenous participation in infrastructure project; High cost of funds as well as access to credit and; Inadequate technical skills due to the collapse of technical education in the country.

He further noted: On-going projects in the Northern parts of the country have been badly affected by the security situation; along with, Problem of corruption both in the process of securing contracts and getting paid of the contracts; Demand for high end properties declined sharply; Absence of long-term affordable credit and; Lack of adequate information on ownership of land.

The LCCI president further noted that the credit situation in the economy is still a major challenge, in two dimensions namely access to credit and cost of credit. “The summary is that the economy is in a quandary as far as credit conditions for investors are concerned. It will be difficult to stimulate job creating growth if this situation persists.

“The situation has been further compounded by the fact that government treasury bills and bonds have returns of between 13-17 percent. The consequence is that available funds have been mopped up by government. It is clearly more attractive now to invest in government securities than invest in ventures that would create jobs.

Even banks now would rather buy treasury bills and government bonds than give loans to investors. This credit and interest rate structure would continue to create distortions in the economy, which will only perpetuate the phenomenon of jobless growth and further depress the stock market,” he asserted.