#Finance

Abandoned projects loom over rising building cost

By Francis Akinnodi

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The rising cost of building materials in Nigeria is increasingly hitting the construction industry hard, with fears that a large number of projects could be put on hold as many developers are now on edge about what to do.

Already, households are contending with soaring food prices and energy costs, and added to it now is the soaring building materials prices which have doubled in the last 12 months on the heels of surging inflation.

The property industry relies on mostly imported building and construction materials, and items such as tiles, cement, zinc, and iron rods among others

Nigeria’s headline inflation, which rose to 28.92 per cent in December 2023, has jacked up the price of building materials, notably cement, reinforcement bars (iron rods), roofing sheets, tiles, paints, and even sand by about 50 per cent.

Experts attributed the rising inflation to fuel subsidy removal, the floating of the naira which has seen extreme pressure on the local currency, the pandemic impact of the Russia-Ukraine war, as well as the cost of other commodities.

Checks by The Hope showed that three major cement producers in Nigeria – Dangote, Bua and Lafarge – have their prices range from N8,000 to N10,000 depending on location.

A breakdown of cement prices showed that the commodity has increased by over 70 per cent between 2022 and July 2023.

“The cost of a 50kg bag of cement increased from N4,200 to N4,900 in Lagos, Ogun, Ondo and Abuja, while in some locations, it went up to N5,000 as at the end of December 2023. Meanwhile, the highest cost of cement now is about N10,000.

Also, block makers charge between N550 and N650 for the 6-inch vibrated blocks and between N700 and N800 for the 9-inch vibrated blocks.

Similarly, a recent market survey showed that the prices of paint have doubled in the last three years. For instance, in 2020, a bucket of four litres of emulsion paint went for as low as N1,000, however, the same bucket is now sold at N2,000. This also applies to all other sizes as the 20 litres which was sold at between N5,000 and N6,000 is now sold at between N11,000 and N12,000 depending on the location.

A tiler and trader on doors, Uche lamented low patronage as people were finding it difficult to continue with their housing projects as a result of the high cost of materials, adding that the exchange rate was also a contributing factor.

“The decline in the number of people building houses has affected the business because of the low purchase rate of these materials,” he said.

“Currently, we sell floor tiles (40×40) for N5,000 per metre, as against N2,500, it was sold last year. The price increase is also dependent on the measurements and type.

“As long as the dollar exchange rate continues to increase, prices of building materials will increase. Also, we blame the increase in fuel, transportation and taxes. The rate at which people build houses has reduced, and the demand for materials has also reduced.

Also speaking, a cement dealer in Ondo, Adebayo Adedayo, said business owners have never had it this bad as sales have remained very low due to the rising cost of cement.

“On a normal day, I sell between 200 and 250 bags of cement but now I barely sell up to 50 bags. Customers are now complaining they can’t buy cement for that amount and are waiting to see if the price will come down and only God knows when it will come down.

“Every day, prices of cement are going up, many of my customers have stopped coming and when I asked they say they can’t afford the amount, it’s so sad,” he further lamented.

Meanwhile, an estate surveyor, Henry Adewole, in a chat with The Hope said the current situation if not arrested will have severe impact on the construction sector.

According to him, “Projects have slowed because the cost of construction materials has gone out of control. Nowadays, both the government and private sector contractors are in a fix because usually when they are engaged, they are substantially mobilized so that they can buy all they want to buy and keep.”

“The aim of substantial mobilisation of the contractors was to avoid cost variation, which has put many projects at risk at the moment. But today, contractors will buy materials at a price but when they go back tomorrow it will be another story and that has taken a lot of projects back.”

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