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Nigeria’s construction costs rose by 20% over the five months between December 2025 and May 2026 amid a surge in building material and energy prices.
The finding was disclosed in a report by Fortren & Company, authored by the firm’s Chief Executive Officer, Martin Uche.
The report attributed the increase to supply chain disruptions and rising freight costs linked to the escalating Iran–Israel conflict, which have pushed up project delivery costs across key African markets, including Nigeria.
What the report is saying
The report identified escalating geopolitical tensions linked to the Iran–Israel conflict as a major factor behind the rise in construction costs. It stated that disruptions to energy and freight flows through the Strait of Hormuz have significantly affected global logistics and supply chains.
Other News
- “Fortren & Company’s tracking of construction input and energy cost indices across six African markets shows an average increase of 20% over the five months to May 2026, driven by supply chain and freight disruptions linked to the escalating Iran-Israel conflict,” the report read in part.
- “One of the direct impacts we are seeing is an increase in the cost of building materials. In the past five (5) months, construction costs have risen by 20% in countries like Nigeria.”
- The report added that Nigeria is among the most affected markets due to its reliance on imported cement, steel, and finishing materials, as well as diesel-powered construction activities.
Cement, steel, and finishing materials recorded the sharpest increases, prompting many contractors to move from fixed-price contracts to indexed pricing structures. It also noted that developers are increasingly delaying projects, renegotiating agreements, or scaling back specifications as project feasibility comes under pressure.
More insights
The report stated that the 20% increase in construction costs reflects a broader repricing cycle across African real estate markets rather than a temporary inflationary shock.
- Elevated energy prices and disruptions to global freight routes have structurally increased the baseline cost of development activity.
- Nigeria’s dependence on imported construction materials and diesel-powered systems has amplified its exposure to global oil price movements. The gap between projected and actual development costs has widened, particularly for projects initiated under earlier pricing assumptions.
- The growing adoption of indexed and phased contracting models is becoming more common as developers and contractors seek to share risks in a volatile environment.
The report noted that while these contracting models may provide greater flexibility, they could also slow project delivery timelines and complicate financing arrangements. It further observed that rising construction costs are beginning to influence broader real estate pricing, with implications for rents, affordability, and investment yields across major urban markets.
What you should know
The Strait of Hormuz has remained effectively closed or severely restricted for most commercial shipping activities since early March 2026 following Iran’s response to US and Israeli strikes that began on February 28.
- Shipping traffic through the route has fallen to a fraction of normal levels, with some days recording almost no vessel transits.
- Restrictions have been linked to mines, attacks, security threats, insurance cancellations, and selective approvals by Iranian authorities.
- Iran has periodically eased and reinstated restrictions amid fragile ceasefire arrangements and continuing regional tensions.
- The disruption has affected roughly 20% of global seaborne oil shipments and significant liquefied natural gas flows, contributing to higher energy and transportation costs.
Although US officials have reported progress toward a possible arrangement that could reopen the route, full normalization has yet to occur.
The continued uncertainty surrounding the Strait of Hormuz remains a major factor influencing global energy markets, freight costs, and supply chains, with direct implications for construction activity in Nigeria and other import-dependent economies.
