Construction & Real Estate
From The Report: Nigeria 2022
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Construction in Nigeria has recently been constrained by relatively low public investment and high operating costs. Moreover, its real estate sector experienced a challenging 2020, characterised by a drop in demand, movement restrictions and global supply chain disruptions. However, renewed prioritisation of infrastructure projects – particularly in energy, housing and transport – is expected to drive recovery as the country bounces back from the Covid-19 crisis. Looking ahead, one segment poised for growth is affordable housing. The authorities’ prioritisation of developing such units and facilitating cheaper mortgage options should help more residents become homeowners in the coming years. Overall, reducing dependence on imported building materials is key. While border closures and transit restrictions stalled building activity, it also prompted developers to source materials locally – a trend that is expected to continue.

This chapter contains an interview with Babatunde Fashola, Minister of Works and Housing of Nigeria.

Articles from this Chapter

Overview

Priority projects: Efforts to close the infrastructure and housing gaps resume with the help of renewed local materials production
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After growth of 1-2% per year between 2017 and 2019, in 2020 the Nigerian construction sector contracted for the first time since 2016, when the economy last entered a recession. The government launched the Economic Recovery and Growth Plan (ERGP) 2017-20 at that time to reinvigorate the economy by prioritising infrastructure investment, among other objectives, which was expected to drive construction activity over the period. However, the sector’s expansion was constrained by relatively low public…

Analysis

Partnering up: Large-scale transport and energy projects attract significant participation from private and foreign players
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In early 2021 the government launched a slate of major projects to help bridge Nigeria’s infrastructure gap. In support of this, the country’s leaders created the Infrastructure Corporation of Nigeria, or InfraCorp, in February of that year: a public-private fund to finance critical infrastructure such as railways and roads. The construction sector is expected to be a significant growth driver for the economy over the next few years, underscored by the 2021 budget allocation of N3.9trn ($10.4bn)…

Interview

Keeping to strengths: Babatunde Fashola, Minister of Works and Housing, on sharing the responsibility of infrastructure development
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Interview: Babatunde Fashola Where are the priorities for 2021 in terms of infrastructure development? BABATUNDE FASHOLA: The more transport infrastructure we provide the more efficient the economy becomes, resulting in more business opportunities. The ministry’s goal to improve infrastructure aligns with the administration’s efforts to bolster the ease of doing business as a means of stimulating inclusive growth where wealth and opportunities are evenly distributed across in the economy. As…

Overview

Focused needs: Segments witnessed varying effects due to the Covid-19 pandemic, which is shaping real estate strategy going forwards
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Nigeria’s real estate sector experienced a challenging 2020 in line with broader economic trends, characterised by a drop in demand, movement restrictions and global supply chain disruptions associated with the Covid-19 pandemic. The health crisis resulted in various negative effects across almost all real estate segments: commercial properties saw higher vacancy rates as white-collar workers shifted to working from home; residential transactions slowed amid income uncertainty; and lockdown measures…

Analysis

A fairer market: Government entities work to address expensive and inaccessible mortgages to facilitate homeownership
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Even as the authorities work to create more opportunities for Nigerians to own affordable homes, mortgage penetration continues to be low. The ratio of outstanding mortgages to GDP was 0.5% in 2020 – up from 0.2% in 2019 – compared to 18.9% in Namibia, 16.2% in South Africa, 10.2% in Tunisia, 2.2% in Kenya and 1.6% in Ghana, according to the Centre for Affordable Housing Finance in Africa (CAHF). That year there were some 535,000 outstanding mortgages valued at $2.2bn in Nigeria, and the country…