Nigeria’s construction industry has been near standstill for the past few months due to the triple combination of the inability of the Federal Government to roll out its economic policies, huge debt owed contractors and the advent of the rainy season.
The industry which contributes about 70 percent of the country’s gross domestic product, GDP, is having serious multiplier effects on other sectors of the economy due to the inactivity going on in that industry.
According to Vanguard, the inactivity in the construction sector has led to job losses as employers who can no longer cope with the wage bills of their staff, have begun to lay them off.
A Lagos-based developer noted that investors are waiting for the Federal Government to unfold its economic policies to enable them know what next to do. According to him, it would be suicidal for any investor worth his onions to plunge into the murky construction industry without first knowing the policy thrust of the present government.
Apart from the inability of a clear economic policy, the huge debts owed contractors has thrown many of them out of business. Those who borrowed money from commercial banks to finance their projects, are being hunted by the banks for non-payment of debts.
The President of the Federation of Construction Industry, FOCI, the umbrella body for about 126 major construction companies operating in Nigeria, Mr. Solomon Ogunbusola said members of the Federation are being owed over N600 billion for already completed projects. Ogunbusola who spoke at the just concluded annual general meeting, AGM, of the body, explained that the Federal Ministry of Works, alone is owing contractors a whooping N500 million for completed jobs.
Construction giants, Messrs Julius Berger Nigeria, PLC, penultimate week, cried out over a N90 billion debt, which the company said is hampering its operations.
The company’s Financial Director, Mr Wolfgang Kollermann who disclosed this while fielding questions from journalists at the company’s 45th annual general meeting, AGM, in Abuja said the Federal Government alone is owing the company N67.5billion representing about three quarters of the debts owed the company. The remaining one quarter (N22.5billion), he said, is being owed by private companies.
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Ogunbusola noted that construction companies are either closing construction sites or retrenching their workers, The worst hit are the casual workers who are paid stipends either weekly or on monthly basis.
His words: “ The construction companies in Nigeria are working below 30 percent, not because we are interested in doing this, but we have been handicapped due to lack of payment by our clients and the major client we have today is the government (Federal, State and the local governments).
Our members are indebted to the banks. I can say authoritatively that the banks are writing and threatening some of our members, that they would publish their names that they are chronic debtors because, according to them, it is a directive from the Central Bank of Nigeria”.
Continuing, the FOCI boss who is also the Managing Director of an indigenous construction company, S&M Nigeria Limited said many companies are downsizing to be able to cope with their lean finances. “We have retrenched a lot of people. Until last week, we are still retrenching people and the process will continue until when we get a stable place. We are merely keeping the offices because we just want to be in existence with the hope that the new administration would be a better one for us. We cannot hide any longer. He regretted that most of the projects done by contractors were financed with money borrowed from banks and very high interest rates.
“The advent of the rainy season has equally helped to worsen the already poor state of construction activities the country. This period is usually not the best of times of construction industry operators, as the rains usually disrupt the tempo of construction works.