The Nigerian Institute of Quantity Surveyors has called on the Federal Government to promptly intervene and stabilise the prices of products in the construction sector, to curtail the negative effects of hyperinflation in the industry.
The President of the NIQS, QS Kene Nzekwe, made the call during a press conference in Abuja, where he warned that the trend of increased prices of construction materials could disrupt economic projections, and push the economy into uncharted territory.
He lamented skyrocketing prices of building products while calling for the government to consider opening the country’s borders, to allow for the import of cement, which would crash prices in the local market.
He also noted that the industry served as a tool for measuring development as a country.
“The construction industry was reported to have contributed up to 11.79 per cent to the nominal GDP in the first quarter of 2023. This shows how important the construction industry is to the Nigerian economy and the need for all stakeholders to protect this important industry.
“Inflation is a part of economic cycles, but what we are currently facing in Nigeria is hyperinflation, an uncontrollable surge in general price levels. The repercussions are dire, disrupting economic projections and compelling government planners into uncharted territory,” he said.
Nzekwe added that the hyperinflation was crippling the construction industry, resulting in the halting of projects and that it could impede the development of critical infrastructure.
“The price of cement, using a 50kg bag as an indicator, between January 2024 and February 2024, a period of about six weeks, has increased from N4,500 to between N12,000 and N13,000. This is an increase of between 100 per cent and 150 per cent. Reinforcement steel rods, another major material for construction, moved from around N590,000-N650,000 per tonne as of January 2024 to N1.2m-N1.4m as of February 2024, an increase of over 100 per cent in a short run of less than six weeks.
“This ugly trend is making it more difficult for prospective clients to afford construction projects and has forced many projects to stall, pushing contractors into financial distress. The repercussions extend beyond stalled projects; it impedes the development of crucial infrastructure such as roads, hospitals, and educational facilities.
“Private sector investors are also reluctant, creating an adverse cycle that hampers economic growth and job losses in the construction industry,” the NIQS president stated.
The institute, as part of its recommendations, urged the government to engage local manufacturers to understand their challenges, stabilise the exchange rate by clamping down on “saboteur” Bureau de Change operators, and monitor and enforce Executive Order 5, which would promote local contents in the planning and execution of projects.
“Some of the challenges highlighted by the local manufacturers include exchange rate volatility, which has seen our currency depreciate by about 300 percent in a few months. Combating oligopolies and cartels in the construction and manufacturing industries must be encouraged. Perfect competition should be the aim.
“The government must employ a mix of monetary policies and exchange rate policies to stabilise the exchange rate. Implementing a friendly tariff regime, involvement of quantity surveyors to manage price fluctuation from the first principle,” Nweze asserted.
