Abuja, Nigeria — November 12, 2024: Nigeria’s construction industry is facing a major crisis, as the prices of essential building materials have skyrocketed by up to 100% over the past year, exacerbating the already difficult economic situation for private property developers and prospective homeowners alike. The soaring costs, driven by inflation, supply chain disruptions, and escalating labour expenses, have caused significant slowdowns in construction projects across the country.
A survey conducted by Daily Trust reveals that key materials like cement, iron rods, and paint have seen sharp price hikes. For example, cement prices have jumped from N4,000 to N8,800 per bag, while iron rods have doubled in cost, rising from N800,000 per ton to N1.6 million. The price of blocks has also surged, with a unit now costing up to N600, compared to N250 last year.
The rising costs have not only hit large-scale developers but have also caused delays for homeowners attempting to build through direct labour. Suppliers have reported that their capital has been drained, and their stocks are dwindling due to unpredictable market conditions.
Supply Chain and Inflation Pressures
The National Bureau of Statistics (NBS) reported that Nigeria’s headline inflation rate reached 32.7% in September 2024, up from 32.15% in August, largely driven by increases in food and transportation costs. The situation has resulted in a slowdown of construction activity as developers face mounting costs that are forcing many to halt or delay projects.
A civil servant in Abuja, Joshua Oluwatobi, expressed frustration, saying he could no longer afford building materials due to the rapid price increases. “Just last month, I purchased iron rods for N1.6 million per ton, double the price from earlier in the day,” Oluwatobi said. “As civil servants, we can no longer afford homes, and we are calling on the government to intervene.”
Homeownership Dreams Fade
The impact is being felt across the country, particularly by those in the lower to middle-income brackets. Builders and property developers are also struggling, with many halting projects or laying off workers due to the unsustainable cost of materials. Musa Ibrahim, a real estate developer, stated that affordable housing for all remains an unattainable goal under current conditions. “The government keeps talking about affordable housing, but their policies are making it even harder to build homes,” Ibrahim lamented.
Another developer, Khalid Usman from Kano, stated that his business is no longer viable due to the daily price increases. “I have had to lay off my workers. We can no longer afford to continue with construction projects,” he said.
Policy Challenges and the Naira Crisis
The devaluation of the naira is a significant factor in the rise of building material prices. According to Osilama Osilama, Vice President of the Real Estate Developers Association of Nigeria (REDAN), the naira’s exchange rate, which has plummeted from N460 to N1,700 per US dollar, has significantly impacted the cost of imported building materials like iron rods.
The association is calling on the government to revisit its policies on foreign exchange and fuel subsidy removal, which are further contributing to the rise in construction costs. Osilama also advocated for increased funding to the Nigeria Building and Road Research Institute (NIBRRI) to promote local manufacturing of building materials, which could help stabilize prices and conserve foreign exchange.
Government Efforts to Address the Crisis
The Nigerian government has acknowledged the challenge. Minister of Housing and Urban Development, Ahmed Dangiwa, has met with cement and building material manufacturers to discuss rising costs and ensure greater transparency in pricing. The minister has also proposed the establishment of manufacturing hubs in each of Nigeria’s six geopolitical zones to locally produce building materials, thereby reducing dependency on imports and potentially lowering costs.
Despite these efforts, experts argue that more immediate and comprehensive interventions are needed to tackle the underlying issues and provide sustainable solutions for Nigeria’s construction industry, which continues to face enormous challenges.
The escalating cost of building materials and the slow progress on critical reforms have raised doubts about the viability of the government’s housing programs, leaving many Nigerians questioning the future of affordable housing in the country.