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Opportunities in the Nigerian Construction Industry

Business Posted on Thu, January 14, 2016 15:41:55

With a population of over 180 million
people, Nigeria ranks as the 7th most populated country in the
world. Nigeria is an emerging market and currently has the largest economy in
Africa. These alone make investment in its construction industry a lucrative
venture. A large population spurs the demand for more housing and
infrastructures and any investor willing to step in and meet these needs would
be rewarded with handsome profits. Currently, about 100,000 homes are built
annually in the country despite an average figure of 700,000 required to meet
the ever increasing demand. To help tackle this shortage, the Nigerian
government in 2015 initiated two schemes; National Urban Development and
National Housing Policies. A total of $289.8 billion will be made available to
these two schemes to provide about 1 million housing units yearly. Building houses
also instigates the construction of other infrastructures in such areas
including; roads networks, school, parks, shopping malls and other amenities. It
also opens the way for the establishment of raw materials producing factories
by other investors for the production of steel, iron, aluminum and much more
for construction.

Over the last 5 years, the Nigerian
construction industry has witnessed an annual growth rate of about 9.5% and it
is projected to continue or increase over the next 20 years. Several state
governments are now realizing the significance of returning to their master
plans and town planning laws. This will set the ball rolling for large
construction projects in these states.

Housing

The Nigerian Housing needs span across
residential and commercial housing. Low cost housing is in very short supply in
major cities like Abuja and Lagos and also other state capitals. Investors can liaise
with companies or government organizations employing staff on a more permanent
basis to create suitable payment plans for such houses. Nigeria has recently
witnessed an influx of foreign investors; the increased presence of these
expats in the country has placed a demand for more luxurious houses and
serviced apartments. The creation of mega cities in Lagos and the Technology
village in Abuja also exposes the avenue to explore more residential housing
investment opportunities.

Modern and practical commercial buildings
are also in short supply. Most cities need more “professional looking”
commercial serviced and non serviced office complexes. These structures are also
required in the technology village and mega cities. The retail, hospitality,
educational, telecommunication and many other sectors are expanding and they
require modern commercial offices in different cities across the nation to do
business in. Profit margin on buildings in Nigeria is between the 25% to 30%
mark unlike an average of about 20% in more matured markets. So what is not to
like?

Infrastructures

Nigeria is an emerging market with
several developmental projects. These projects are major drivers of the country’s
construction industry. Most states have embarked on road reconstruction and the
construction of new network of roads. They
are also constructing drainages, building bridges and dams, rural electrification
and other major construction projects. There are major railway expansion
projects at the moment in Nigeria; within larger states like Lagos and between
other states to reduce the distance of travelling by road. Foreign investment
are also sought for new and existing sea ports, docks, bridges and airports,
which are at the heart of any developing nation. The Abuja Airport building and
its facilities for instance is managed
by the Abuja Gateway Consortium which consists: Airlines Services Limited,
Asset and Resource Management, NairaNet Technologies Limited, AG Ferrero Ltd
and Airport Consulting Vienna GmbH, Austria. This deal was signed in October
2006 and will span a period of 25 years. Many government buildings especially
in states are decaying or no longer fit for modern use. These are also avenues
for investment.

Raw
Materials and Machineries

Construction companies require
cement, aluminum, steel, iron rods, bulldozers and other raw materials and
machineries to carry out construction tasks. Most of these materials and
machines are imported at high costs to these companies thereby increasing their
cost of production. Standard Iron rods are still being imported and companies
will save funds if purchased locally. The construction industry requires about
17 million tones of steel yearly, but the country’s production is nowhere close to
that and so relies heavily on imports. Investors
may also set up local assembly plants or fully manufacture machineries like
cranes, welding machines or bulldozers.

There is so much more for investors
to see and explore about the Nigerian Construction Industry and we are happy to
help. Olives
Consultancy Services assist investors looking to invest in the Nigerian markets
in a variety of ways. Please visit our website www.olivesconsulting.co.uk for
more information or send us an email on admin@olivesconsultancyservices.co.uk.
We have offices both in the UK and in Nigeria. We will be happy to read from
you and answer your questions too. Please feel free to comment below. Many
thanks from the Olives team.



Happy New Year

Business Posted on Thu, January 14, 2016 15:38:40

Olives Consultancy Services wishes all its excellent readers and clients a happy new year. We believe you had a very restful holiday season with family and friends. Welcome to a new year where making well informed investment decisions will be key to financial sustenance. We at Olives are here to hold your hand through the Nigerian markets, to help you make the right investment to maximise profits.

Welcome to the New Year!!!