Following a difficult 2016 the Nigerian construction sector showed signs of stronger growth from the first half of 2017 onwards. The uptick in activity comes on the back of a low base, however, as the country’s first recession in 25 years affected private investment in real estate building and oil companies had to scale back investment plans due to lower global are now helping to provide fertile ground for tarde.
Local content, in particular, is playing a larger role in the market, with domestic companies active as both standalone contractors and as subcontractors for foreign firms. While public sector tenders – which have traditionally been the source of major works – remain limited compared to the booming years of the 2000s, the increase of private development in the residential and commercial building segments offers promise.Nigeria is often highlighted as one of the most attractive markets in Africa for construction works.
In West Africa, of the nearly $120bn committed to infrastructure spending across 92 projects, 61% is earmarked for plans in Nigeria.The country currently has 68 major building projects with a total capital expenditure of approximately $73billion, second only to South Africa on the entire African continent.Given the size of the Nigerian economy and traditional spend of other African states, however, these figures mask a historical underspend in gross fixed capital formation (GFCF), a category that includes infrastructure projects and land improvements.
An average GFCF of 30% of GDP is considered optimal for creating a growth-conducive environment, but in recent years Nigeria has spent just 11.9% of GDP compared to a sub-Saharan Africa average of 21.5%. Ethiopia, the continental leader, spent an average of 32.8% of its GDP on infrastructure over the last decade.
