Nigeria’s Construction Industry Poised to Achieve 3.9% Growth in 2021
After a rough year in 2020 with a 7.7% decline in output, Nigeria's construction industry is expected to achieve a growth of 3.9% this year, 2021.
This is according to estimates by economic analyst, GlobalData.
According to GlobalData, the 7.7% decline in 2020 was caused by the Covid-19 restrictions.
The 3.9% growth in 2021 is expected to be driven by a sharp recovery in construction output levels compared to periods when works were not permitted or were severely restricted in 2020 because of the Covid-19 pandemic.
According to the data, the country’s construction market will increase by 3.2% annually between 2022 and 2025. This growth will also be supported by the state’s investment in the infrastructural and energy sector.
Update from Kaduna State Urban Renewal Projects (Road Component).— Kaduna State Roads Agency (@KADRA_kdsg) February 10, 2021
Status: Construction work at Underpass bridge at former Leventise Roundabout, Yakubu Gowon way is on going. pic.twitter.com/bPFBSJnMGL
The 2021 Appropriation Bill will also aid in this impressive growth. This Bill provides a roadmap for Nigeria’s post-Covid-19 economic recovery.
The Nigerian federal government also created an infrastructure development company, named Infraco, with an initial seed capital of 1 trillion Naira (US$2.4 billion). The infrastructure company is backed by the Nigerian Central Bank, the Nigerian Sovereign Investment Authority, and the Africa Finance Corporation. The company is expected to grow its capital and assets to 15 trillion naira over time to fund public projects like roads, rails and power.
LAGOS LIGHT RAIL PROJECT 🚄🚆 (Nov. 2021 Update)— Aerial Lagos (@AerialLagos) November 24, 2021
CCECC @CCECC8 continues the Erection of Pre-cast Beam for Lagos Light Rail (Blue Line) Project in Marina.
⏱️ Target is to finish by Q4 of 2022
@JohnCCECC @Vincent_CCECC @GreaterLagosNG @jidesanwoolu @Mr_JAGs @tfk_gawat pic.twitter.com/LYFFQx8H6i
Another factor that’s aiding the growth of Nigeria's construction industry is the passage of the Petroleum Industry Bill (PIB). This bill increases production ceilings while cutting taxes.
Dhananjay Sharma, a GlobalData analyst, said, “The expected passage of the long-pending Petroleum Industry Bill (PIB) may provide a much-needed impetus to Nigeria’s oil and gas sector, thereby creating multiplier effects across the entire construction chain and Nigerian economy. The government’s decision to reduce deepwater royalties and other taxes to 5% from the earlier 7.5%, and increasing production levels to 50,000bpd from the earlier 15,000 BPD, offer optimism regarding the government’s intentions to pass the bill.”
He added, “The PIB augurs well for the Nigerian economy in general and the construction sector in particular, given delays in implementing key legislative reforms that have compounded problems for the sector, which is still suffering under the weight of OPEC+ output cuts and the impact of Covid-19.
“Nigeria’s oil and gas construction projects have a combined value of $140bn, of which $89bn relates to projects in the pre-execution stages. If all projects do proceed as planned and spending is evenly distributed over the construction phase, annual spending for 2021 is expected to be $8.2bn and could reach $25bn in 2023.”
Top Photo: Construction of A&A Tower Building at Eko Atlantic City, Lagos, Nigeria [Eko Atlantic City LinkedIn post]