Construction Workers Send SOS to FG on Impact of Inflation on The Industry

• Construction industry workers under the aegis of the Federation of Construction Industry (FOCI) have sent an urgent message to the federal government
• The organisation said the impact of inflation on building materials is killing the industry as companies can no longer keep up with budgets
• It asked the government to conduct a comprehensive review of existing contract templates and procurement guidelines

Legit. ng's Pascal Oparada has reported Tech, Energy, Stocks, Investment and the Economy for over a decade.

The Federation of Construction Industry (FOCI) in Nigeria has sounded the alarm to the Nigerian government on the impact of inflation on building materials in the country.

The organisation said in a statement seen by Legit.ng that the industry plays a pivotal role in driving Nigeria's economic growth, creating employment, and enhancing the quality of life for Nigerians.

Read also

US probes security risks posed by Chinese tech in cars

The construction industry is about to collapse

The organisation said the industry is on the brink of collapse due to the country's soaring price of building materials.

The statement said:

"The excessive inflation of construction materials, including cement, steel, gravel, and asphalt, has significantly escalated project costs, rendering them financially unfeasible for public and private stakeholders.

"Moreover, the skyrocketing prices of diesel, a critical fuel source for construction machinery and vehicles, have further compounded the financial burden on companies, exacerbating their already precarious financial situation. The current exchange rate has doubled the cost of spare parts and further reduces the investment opportunity to expand or replace current machinery."

FOCI stated that the impact of inflation on the industry is diverse, as projects are experiencing delays and disruptions due to companies' struggle to procure essential materials within budgets.

Read also

Asian markets track Wall Street losses

It urged the Nigerian government to take decisive action to ease the plight of construction firms and save the industry from collapse.

FOCI's recommendations to FG

FOCI proposed a comprehensive review of existing contract templates and procurement guidelines to incorporate more robust and flexible provisions for addressing inflationary impacts on material costs. This may include adopting price escalation clauses linked to relevant inflation indices or market benchmarks.

It also asked the government to strengthen monitoring and reporting mechanisms to track changes in material prices and assess their impact on project costs in real-time. This will enable proactive identification of cost overruns and facilitate timely interventions to mitigate their effects.

FOCI said:

"Enhanced financial support mechanisms, such as access to low-interest loans and grants, should be made available to construction companies to mitigate the financial strain caused by inflation and facilitate project continuity.

Comprehensive policy reforms are needed to address structural issues contributing to inflationary pressures in the construction sector, including supply chain bottlenecks, regulatory barriers, and market distortions."

Read also

Analysts see naira nearing N1,000/$ in 2024 as Access, GTB, others get new interest rate

Dangote, BUA, Lafarge, and other manufacturers agree on the new price

Legit.ng reported that cement manufacturers have decided to reduce the product's price to between N7,000 and N8,000 per 50kg.

This was agreed during a meeting initiated by the minister of works, David Umahi, and attended by his counterparts from the Ministry of Industry, Trade, and Investment, including Doris Uzoka-Anite, in Abuja on Monday, February 19, 2024.

The meeting was part of efforts to identify the underlying reasons for the abrupt increase in commodity prices.

Source: Legit.ng