Significant reduction in construction activity in the FCT

It is no longer news that the FCT stands head and shoulders above other Nigerian cities in massive building construction owing to its status as the seat of power at the centre and hotbed of investment activities of multinational corporations, estate developers and individuals many of whom are money bags, resident in the city.

Investing in real estate business and massive building construction has held a certain fancy for most investors in the city. That fancy however, is suddenly being translated into a nightmare due to the cash crunch which has hit housing construction projects resulting in a sharp drop in house construction.

It will also be a joke to think that this sad development is peculiar to only the highbrow districts of the FCT. Inside FCT can authoritatively disclose that, indeed, these are not be the best of times for estate developers, construction firms and businessmen involved in real estate development from Gwagwalada to Lugbe; from Kubwa to Wuse, Maitama and Asokoro districts respectively. Speaking to Inside FCT, Emmanuel Onoja, a building materials dealer in Wuse, noted that there had been a significant reduction in construction activity in the FCT for several months.

He attributed the slowdown to lack of clear government policy direction, the harsh economic situation facing land developers and bad weather. He maintained that all the parties involved in house construction projects were currently battling with uncertainties surrounding their businesses, adding that “many of them are still owing commercial banks and that such banks are breathing down their necks to have them repay the loans they had procured.” He also remarked that the new regime was yet to make its policies known in respect of importation of building materials and whether it would sustain the programmes of the previous regime that helped provide credit and other substantial support to land and estate developers.

He insinuated that many land developers had grown apprehensive that the current administration might revoke many building construction contracts awarded by the past administration, especially those that concerned public structures. He then confirmed to us that there was significant slowdown in the buying and selling of building materials. Building construction to him had also dropped due to the rainy season which always left construction sites constantly flooded.

To him, “construction is a cash-based business and because land developers do not have or cannot obtain sufficient bank credit any more, they cannot buy building materials to sustain the projects which they are embarking upon. Besides, most building contractors could neither pay the workers at their construction sites nor meet the completion dates of their construction projects.”

Timothy Ajani, a surveyor, was of the view that the slowdown in building construction in the FCT, was largely due to lack of bank credit and mortgage facilities. He said that the previous administration had encouraged private sector investments in the real estate sub-sector through credit facilities and credit guarantees. He also stated that government had provided various housing schemes on its own.

To him, most commercial banks are still coming to terms with the impact of the policy on Treasury Single Account (TSA) in their operations, insisting that “many banks had hitherto relied upon public sector deposits to fund their lending activities.” He added that “it was through such funds that many real estate developers obtained bank credit.” To another respondent who pleaded anonymity, the rising cost of building materials accounted for why most building projects in the city were stalled.

He pointed to the fact that the exchange rate of the Naira to the Dollar had made most building materials like tiles, kitchenware, toilet ware, electric gadgets, and others that were imported to record a sharp rise in prices. He hoped that the prices of such building materials would drop since most of the items had no quality home-made substitutes.

He then added that most real estate developers were still gauging the mood of the economy, and that once there were strong indications that government was on the right track and ready to provide the much-needed support and guarantees, building constructions would rebound.

However, he said that he was lucky to complete a three-storey building without borrowing a dime from a bank the year before. According to Musa Abdullahi who simply identified himself as “contractor,” since shelter had been one of man’s three basic needs from time immemorial, government must find a means by which that need could be repeatedly met. He said that “public private partnership arrangements in real estate projects remained the key to massive housing delivery to Nigerians.”

He urged the current administration to quickly provide the much needed policy framework and programmes that support real estate developers. If that was not done, according to him, there would be a continuous increase in rent in the FCT due to the influx of people into the city, to the extent that the poor “will no longer find accommodation.”

You would recall that a government report, early 2015, stated that Nigeria had over 17million housing deficit which explained why many Nigerians could not afford a decent accommodation for their families. All hands must be on deck to raise the tempo of construction of houses, residential estates, and other structures for public and private use in the FCT so as to sustain its claim as the fastest develop.

— nationalmirroronline.net