The Federal Government is considering establishing manufacturing hubs for local building materials in free trade zones nationwide.
The plan aims to leverage the advantages of these zones, including tax incentives, reduced regulatory burdens, and access to markets, to boost local production, lower construction costs, and make housing more affordable.
Minister of Housing and Urban Development, Musa Dangiwa, disclosed this during his keynote address at the Stakeholder Forum on Development of Fiscal Incentives for Manufacturers of Local Building Materials Components in Nigeria.
He noted that the suggestion to use free trade zones was raised during the forum. This was disclosed in a statement on the ministry’s website on Thursday.
“The hubs will be strategically located to ensure easy access to raw materials and distribution networks, further reducing transportation costs and enhancing competitiveness.
“In this regard, the suggestions yesterday that these hubs should be established in existing free trade zone areas is worthy of serious consideration. Free trade zones already offer significant advantages, such as tax incentives, reduced regulatory burdens, and access to markets. By leveraging these zones, we can accelerate the establishment of manufacturing hubs, reduce initial setup costs, and attract both local and foreign investments,” Dangiwa stated.
Providing more insight, Dangiwa highlighted that building materials constitute approximately 50% to 70% of the total cost of constructing a house, with cement alone accounting for about 15% to 20%.
He added that other materials, such as steel, roofing, doors, windows, electrical, and plumbing components, also contribute significantly to overall expenses.
More insights
Dangiwa noted that another approach the government is considering, as suggested during the forum, is to support key material producers, such as cement manufacturers, to expand at their existing sites.
By providing affordable financing, tax incentives, and infrastructure upgrades, these producers can boost capacity, reduce costs, and meet growing demand without establishing new hubs.
- He explained that this strategy maximizes existing resources, saves time and costs, and addresses challenges local manufacturers face, including high production costs, limited financing, competition from imports, and inconsistent policies.
- Dangiwa added that the plan to establish building materials hubs nationwide aligns with past efforts to boost local manufacturing, such as the formation of the Building Materials Producers Association of Nigeria (BUMPAN) in 2004.
BUMPAN was designed to strengthen small and medium-scale industries in the building materials sector and contribute to affordable housing.
However, its impact has been limited, highlighting the need for more effective strategies like the proposed manufacturing hubs.
