Nigerian contractors warn construction sector faces collapse over funding and payment crisis
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The Federation of Construction Industry says inadequate funding, delayed payments and rising operating costs have pushed many of its members to suspend work, and wants urgent government intervention.
The Federation of Construction Industry (FOCI) has warned that Nigeria's construction industry is facing a serious crisis arising from inadequate and unpredictable funding, delayed payments and rising operating costs, and has urged urgent government intervention to prevent the sector from total collapse.
FOCI raised the alarm in a communique issued after its 70th Annual General Meeting, which was read by its President and Chairman of Council, Chief Vincent Barrah. The association said the slow pace of construction activity among its members over the past year was very worrisome, attributing it largely to the gap between annual budgetary provisions and actual cash releases for infrastructure projects. According to FOCI, many projects are awarded without adequate multi-year funding, leading to delayed payments, accumulation of certified debts, reduced activity and, in some cases, suspension or abandonment of projects.
The group said the funding crisis had also taken a toll on employment, with situational reports from its unions indicating that about 1,000 senior staff and 40,000 junior workers lost their jobs during the period under review. It flagged the termination of existing contracts, particularly those handled for the Ministry of Works, non-compliance with standard conditions of contract, and high financing costs, saying lending rates across the banking sector range from about 20 per cent to as high as 46 per cent.
FOCI called for greater collaboration among the Bureau of Public Procurement, the Council for the Regulation of Engineering in Nigeria, the Nigerian Society of Engineers, the Ministry of Works and the Federal Ministry of Justice whenever contract conditions need to be reviewed or replaced. It also sought a more responsive approach to price adjustments, noting that cement, steel, bitumen, diesel, equipment and spare parts had risen sharply after the naira's depreciation. While saying Nigeria's infrastructure deficit offers significant long-term opportunities, FOCI warned that failure to address the challenges could further weaken construction activity, employment and infrastructure delivery.