Interview: David Frame
What are the major challenges and cost factors in undertaking a project as large as Eko Atlantic?
DAVID FRAME: The standard response is always “getting the message out”. Eko Atlantic City will transform Lagos, yet some people still know little about the project, despite the vast amount of publicity it has received. The technical challenges are one thing for us to meet, but getting people to understand what we are doing and why sometimes seems like an even bigger challenge.
Without a doubt, utilities – and electricity in particular – are the greatest cost factors. We have spent a lot of money in the past year procuring electrical cables for the distribution network and bringing in pipes, valves and controls for a reliable water supply. The utilities for the project are expensive in part because this is what is selling Eko Atlantic. When you buy a piece of land here, you have a very efficient road network, but you also have a plug-in to water, sewage, power and fibre-optic cables. Starting fresh, we have the opportunity to utilise modern techniques and materials. If you had to install a water main in an existing busy city, it would cause horrendous disruptions. You would have to deal with other utilities services that may not be well mapped. With a fresh canvas, you can create the most efficient system.
How have currency fluctuations affected the cost of building materials?
FRAME: In my experience, the market for building materials is far more stable than it ever was before. One of the biggest problems we used to have in the construction industry was rapid inflation and the cost of materials, together with the depreciation of the naira against all major currencies. In the past, we had to present full documentation to our clients, particularly if it was a government project, stating all fluctuations in prices. Since 2000 there has been increased stability in exchange rates and inflation in the country. This is again a reflection of the increasing strength of the naira on international markets. You just have to look at the skyline of Lagos and the new projects going on. Major cement suppliers are making plans to grow their capacity because their current facilities simply cannot support demand. The start of 2015 has seen a reduction in the value of the naira, a consequence of falling oil prices worldwide; however, there are already encouraging indications of a recovery later in the year.
To what extent will local content play a role in the initial development of Eko Atlantic?
FRAME: We already have many local architects and engineers engaged in Eko Atlantic. The first development is being completed by a local architect. When you consider the number of plots we have, each one accommodating two and sometimes three buildings, you see that there are thousands of buildings that need to be constructed before the city is fully developed. Each one of these projects needs a surveyor, project manager, real estate agent, marketing manager, and so on. It just grows and grows. What we are finding is that more and more professionals are starting to recognise that Eko Atlantic is going to be a source of employment and revenue for them decades into the future.
What strides have been made in improving financing options for mixed-used developments?
FRAME: The administrative measures that the Central Bank of Nigeria has applied over the last few years have had a substantial impact on the banking industry. In general, the measures have been welcomed as a necessary step. As a result, there is now far more confidence in the sector and how it is being monitored to ensure that banks do not digress. When you need funding for a project, provided that you have all your paperwork in order, a trip to the bank will generate a much faster response than it would have previously.
The credit facilities at local banks are increasing year by year, and this in turn has opened up confidence from the outside. International financiers are now looking to Nigeria as a viable opportunity for investment.
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