The surge in demand for housing and infrastructure in Nigeria has ushered in unprecedented challenges for builders and developers, particularly due to the substantial rise in the cost of construction materials.
This surge affects critical elements such as Sharp Sand, Plaster Sand, Granite, Cement, Iron, Tiles, Blocks, and Diesel, significantly impacting the construction process.
My recent experience negotiating with an iron vendor sheds light on the severity of the issue. Previously stable at N310,000 per ton, the price of iron has skyrocketed to a staggering N1.5 million per ton.
This drastic increase has created a complex negotiation process, requiring delicate management of expectations amidst financial constraints.
To tackle the surge in real estate construction costs, the government must adopt a comprehensive strategy.
Firstly, there’s a need for proactive intervention in stabilizing the prices of essential construction materials. This could involve incentivizing local production, reducing import tariffs, or implementing policies that encourage fair pricing within the supply chain.
Additionally, promoting research and development in alternative construction materials should be a priority.
Exploring more cost-effective and sustainable options can help mitigate the impact of rising prices. For example, government-backed initiatives to encourage the use of recycled materials or locally sourced alternatives could provide viable solutions.
Strategic planning is vital for navigating the current challenges. The government should work in tandem with industry stakeholders to establish transparent and efficient procurement processes.
This can help streamline the supply chain, minimize delays, and ensure that projects are completed within reasonable timelines.
Furthermore, the government must actively engage with builders and developers to understand their challenges and concerns.
This collaborative approach can lead to the formulation of policies that are not only effective but also considerate of the practicalities faced by industry professionals.
In the absence of prompt action, the likely implications would be twofold. Firstly, the use of materials of lesser quality may become prevalent, compromising the structural integrity of buildings and infrastructure, which can, among other things, lead to the loss of lives and properties.
Secondly, it will exacerbate the already challenging landscape of homeownership for the average Nigerian. The cost escalation of essential construction materials will permeate into the pricing of building sales and landed properties, making homeownership an elusive puzzle to solve for many.
As the government charts its course to combat the surge in construction costs, a key focus should be on promoting sustainable alternatives and fostering innovation in the industry.
Investing in research and development for eco-friendly construction materials is paramount. This not only addresses the current crisis but also contributes to a greener, more sustainable future for the construction sector.
Take, for instance, the utilization of recycled materials. By encouraging builders to incorporate recycled components into their projects, the government can support environmental conservation while simultaneously reducing construction expenses.
This approach aligns with global efforts towards sustainable practices and positions Nigeria as a leader in responsible construction.
Another crucial aspect of the government’s strategy should involve strengthening local production capacities and optimizing supply chain efficiency.
Incentivizing the establishment of local manufacturing plants for construction materials can contribute significantly to cost reduction.
This initiative not only bolsters the domestic economy but also ensures a steady supply of materials at competitive prices.
Consider the positive impact of reducing import tariffs on essential construction components. By creating a more favourable environment for importation, the government can stimulate healthy competition among suppliers, fostering a market where fair pricing is a reality rather than an exception.
Such measures contribute to a more resilient and self-sufficient construction industry.
To implement effective strategies, the government must foster a collaborative ecosystem involving industry stakeholders.
This includes builders, developers, material suppliers, and regulatory bodies. Open channels of communication and shared decision-making can result in policies that not only address immediate challenges but also pave the way for sustained growth.
In my experience as the GCEO of Zylus Group International, collaboration with government agencies and industry peers has been instrumental in overcoming challenges. Joint efforts in developing industry standards, streamlining bureaucratic processes, and ensuring fair competition can create an environment where all players thrive.
Addressing the surge in construction costs must go hand-in-hand with initiatives to enhance accessibility to homeownership.
The government should explore innovative financing models, such as low-interest loans and mortgage schemes, to make homeownership more achievable for the average Nigerian.
Consider the successful implementation of affordable housing programs in other countries. By adapting and implementing similar models, Nigeria can provide its citizens with more opportunities to own homes.
This not only addresses the immediate affordability crisis but also contributes to long-term socio-economic stability.
In conclusion, the surge in real estate construction costs in Nigeria demands a proactive and multi-faceted approach from the government.
Drastic increases in material prices, as experienced in my recent negotiations, necessitate immediate action to prevent far-reaching consequences on the quality of construction and the accessibility of homeownership.
Written by Dr Oluwatosin Olatujoye
GCEO, Zylus Group International
