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Problems and Prospects of Construction Industry in Nigeria

See the Problems and Prospects of Construction Industry in Nigeria.

The construction industry is the sector of national economy engaged in the preparation of land and construction, alteration and repair of buildings, structures (bridges, flyovers, etc) and other real property. When construction is mentioned, the first thing that comes to mind is ‘building’. In commerce, construction is placed under primary production. Construction is a high hazard industry that comoprises a wide range of activities involving construction, alteration and/or repair. Residential construction, bridge erection, demolitions, large scale painting, excavations, road way paving, etc are all construction activities.

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This industry is an integral part of any nation, as in the eyes of the citizens or electorates, development in a country or state is seen through the construction of roads, bridges and drainage systems. Governors continually receive praises and bask in glory when major roads are either constructed or repaired in their territory. Even when the lay men in the state cannot see development from the perspective of GDP, Per capita income, etc, they can always see it in the physical structures which beautify their state.

Problems and Prospects of Construction Industry in Nigeria

The construction industry is of crucial importance in the economy and in national development particularly in developing countries like Nigeria.

As a developing country, Nigeria’s real estate sector is evolving at a tremendous pace and governments at all levels are aware of the role of real estate development on growth of their respective territories. This is because having a roof over one’s head is a very vital part of life. There are various plans that have been put in palce to enable people own a home. This also forms an essential part of the construction industry. Low cost estates and residential areas are built to give low income earners a chance at owning or renting a home at least.

In economic terms, the importance of the construction industry in Nigeria can be assessed by the rate of investment. The building and construction industry has had a rapid and steady growth over the past two decades and it has one of the highest rates of expansion in among all the sectors of the Nigerian economy.

However, despite the plans and strategies put in place to plunge the construction industry into attaining the greatest possible heights with its robust potentials in mind, it has faced a number of problems and these difficulties have served as limiting factors in the development of this sector.



Poor planning in the construction industry has led to a series of problems in the past and are still causing even more. The first angle that can be looked at as regards poor planning is the deviation from the original blue print. Since the government is responsible for the bulk of construction projects in the country, it is expected that it should follow the already established/mapped out plan of what should be built and where/how those constructions should be positioned. However, we see a lot of deviations from the original plan which cause so much friction since the new plans might not work well with the old ones.

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Following up from the previous point, one other problem that the construction industry in Nigeria faces is the lack of concern for proper drainage systems and channels. Roads are constructed without properly considering how the gutters would be linked to a central channel and these roads end up returning to their former poor states after just a few months.

Construction is largely capital intensive. Just the equipment alone cost millions of naira and contractors are continually faced with issues of finance. The contractor has to invest on plant which is expensive in the case of civil engineering jobs, and requires cash for paymet of workers salaries, purchase of materials, etc. Some of them end up using substandard materials just so that they can make a good profit. Finance, even in government projects usually forms a major problem. This is why some projects are undertaken and stopped half way, and the contractors have to wait for more money before they can continue. Such money might not come in timely manner.

There is very little doubt that corruption is a very serious problem in the Nigerian construction industry, especially when the government is involved. In some cases, money is disbursed for a project, but such funds are misappropriated by both the officers responsible and the contractors because they see public money as national cake which must be eaten greedily. This causes delays in completion of construction projects.

The management put in charge of construction projects, especially when local contractors are involved, is usually poor. The management rarely understands how to treat the workers or plan the projects well. They create so much friction and cause inexplicable lapses which lead to poor jobs. When management is constituted by people who only got the job because of their political, tribal or family affiliations, it is expected that a majority of those in charge are simple mediocre managers who have no idea of how to run the show and produce the best results. The most common complaint against Nigerian contractors is that they do not complete jobs on schedule

Although the Nigerian population is large and labour might not be difficult to acquire, the output of these workers have been shown to be relatively low. The expatriate contractors according to research have been able to get the best out of workers when compared to the local contractors, and this can be attributed to better supervision.

Due to the fact that Nigeria is still a developing nation, most indigenous contractors still depend largely on manual labour. This causes delays in completion of jobs, human errors, and concentration on power rather than technique.

Bureaucracy is one problem that real estate developers face. The bureaucratic process of allocation and registration of charges on land is an impediment of real estate development. The lackadaisical attitude to work is the major cause of undue delay at the land registry. Oftentimes, a developer’s application would pass from office to office over several weeks and by the time the necessary approval is obtained, he may have lost his source of funding or incurred huge interest on loan obtained for development.


Foreign exchange fluctuations have become teeth gnashing and serious in recent time. It is very difficult for contractors to put cost on paper for a construction project because prices are very volatile and can change in the construction materials market. Since these projects are capital intensive, such changes can be very significant.

It is not surprising that the expatriate contractors have better technology and techniques, and they have brought rapid growth to this sector. However, the insecurity threat posed by Boko Haram and Kidnappers have caused so many of these firms to be reluctant.


Despite the challenges, there is some light at the end of the tunnel. The government and other concerned stakeholders have taken deliberate steps to mitigate the effects of these challenges on the sector.

First of all, the Federal Government has put in place policies and tax holidays to encourage investment in the sector (especially real estate development).

The boko haram sect which have become a real thorn in the flesh of expatriate investors and contractors are being taken care of as the country has entered a full time war with the menace throttling group. They have also partnered with neighbouring countries to make things more effective. The fear of insecurity is a very serious problem.

Also, to remove the bureaucracy, bribery and corruption associated with land development, most states have established a specific agency to regulate the entire land process.

The recent influx of foreign investment is a huge win, despite the concurrent outflow of foreign investment in other sectors.

The real estate and construction industry creates huge employment opportunities, and with the present government’s interest in creating jobs, the sector should be affected positively.

In recent years, the problem of finance has become soluble because commercial banks are under considerable pressure from the government to assist indigenous companies. The high interest loans used to be a serious turn off.

The latest 10-year forecast from Global Construction Perspectives and Oxford Economics says construction growth in Nigeria will be the fastest of all markets ranging up to 2020. Analysts however contend that this can only happen if there is adequate funding. The government should look into this study and thr potential the construction industry possesses for the development of the nation.

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Eric Arthur

Arthur is a Content Developer at InfoGuideNIgeria.com. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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