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Construction Industry Nigeria

The Construction Industry in Nigeria 2021

Carole Veitch | Nigeria | 20 September 2021

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Report Coverage

This report focuses on the construction industry and infrastructure development in Nigeria and includes information on the state and size of the sector, major infrastructure and construction projects, corporate actions and developments and influencing factors. These include the effect of the pandemic and commodity prices on the economy and the sector. There are profiles of 24 local and international companies operating in Nigeria including Nigerian Stock Exchange-listed Julius Berger, which is one of Nigeria’s most well-known civil engineering and construction companies. Other profiles include ITB Nigeria, a subsidiary of the Chagoury Group, which is involved in high-rise residential and commercial construction projects, Cappa and D’Alberto, which is Nigeria’s oldest construction company and construction and civil engineering company El-Alan Construction Company Nigeria.

Introduction

This report focuses on the construction industry and infrastructure development in Africa’s largest economy, Nigeria. The sector’s revenue declined by 7.7% in real terms to N11.64-trillion (naira) (US$32.44bn ) in 2020. Despite ongoing supply chain disruptions and project delays caused by the coronavirus pandemic, construction activity is steadily recovering. Infrastructure development is the cornerstone of the West African country’s pandemic economic recovery plan. However, the government is grappling with funding challenges and will need to attract private investment if it hopes to start bridging Nigeria’s monumental infrastructure deficit.

Strengths

• Nigeria is one of the largest construction markets in Africa.
• Nigeria, Africa’s largest economy and most populous country, is a strategic West African trade hub with an abundance of natural resources, including substantial reserves of oil and natural gas.
• Nigeria’s construction industry serves all sectors of the economy and is a key driver of socio-economic development, providing shelter, employment and infrastructural development.
• The government has prioritised infrastructure development and is aiming to attract higher levels of private sector investment.

Weaknesses

• Companies undertaking work for public entities typically contend with project implementation delays, funding shortfalls, late payment or non-payment.
• Corruption is endemic.
• Foreign construction companies are generally awarded large projects, at the expense of local contractors.
• Over-reliance on imported building materials and equipment.
• Registering property and obtaining construction permits are complex, costly and time-consuming processes.
• Regulatory oversight is lacking, notably in the informal construction sector where building regulations and standards are commonly violated.
• There is a technical skills shortage.

Opportunities

• Population growth, rising urbanisation and the growing middle class continue to drive demand across all segments.
• Projects focusing on sustainability and green building, including off-the-grid living.
• Public-private-partnerships.
• The development of transport and logistics infrastructure to support the African Continental Free Trade Area.
• The development of “smart” cities.
• The diversification of the Nigerian economy.
• The roll-out of Nigeria’s 30-year National Integrated Infrastructure Master Plan.

Threats

• Domestic and global recessionary pressures.
• Further devaluation of the Nigerian naira.
• Nigeria’s economic fortunes are closely bound to the oil price.
• The coronavirus pandemic presents an ongoing threat to lives and livelihoods.
• The destabilisation of neighbouring countries by Boko Haram and other militant groups.
• The escalation of sectarian violence and the destabilisation of the country.

Outlook

An improvement in investor confidence, stronger crude oil prices and the slow rollout of the coronavirus vaccination programme are supporting the recovery of the Nigerian construction industry. The sector is forecast to grow by 3.1% in 2021 and 3.7% in 2022. With trading under the African Continental Free Trade Area underway and a number of transport and logistics infrastructure projects set to break ground, analysts expect the sector to sustain growth over the long-term. Given the government’s current fiscal constraints, the private sector is expected to play an increasingly prominent role in the financing, construction and maintenance of infrastructure projects. In a Financial Times article published in August 2021, President Muhammadu Buhari emphasised the importance of dealing with security risks through investment in infrastructure and job creation. “Yes, we require the technological and intelligence support that our armies do not possess. Yet the boots we need on the ground are those of constructors, not the military,” he said.

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The Construction Industry in Nigeria
The Construction Industry in Nigeria 2021

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Table of Contents

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PAGE
1. INTRODUCTION 1
2. COUNTRY PROFILE 1
3. DESCRIPTION OF THE INDUSTRY 3
3.1. Industry Value Chain 4
3.2. Geographic Position 6
4. SIZE OF THE INDUSTRY 8
5. STATE OF THE INDUSTRY 11
5.1. Local 11
5.1.1. Corporate Actions 16
5.1.2. Regulations and Government Policies 17
5.2. Continental 18
5.3. International 23
6. INFLUENCING FACTORS 25
6.1. Coronavirus 25
6.2. Economic Environment 26
6.3. Government Interventions 27
6.4. Investment in Infrastructure Development 28
6.5. Population Growth and Urbanisation 29
6.6. Construction Equipment and Materials: Local Capacity, Quality and Security of Supply 29
6.7. Technology, Research and Development (R&D) and Innovation 30
6.8. Environmental Concerns 32
6.9. Labour 33
6.10. Health and Safety Concerns 34
7. COMPETITION 35
7.1. Barriers to Entry 35
8. SWOT ANALYSIS 36
9. OUTLOOK 37
10. INDUSTRY ASSOCIATIONS 38
11. REFERENCES 38
11.1. Publications 38
11.2. Websites 40
APPENDIX 1 42
Summary of Notable Players 42
COMPANY PROFILES 49
ARAB CONTRACTORS (OSMAN AHMED OSMAN) NIGERIA LTD 49
BRUNELLI CONSTRUCTION COMPANY NIGERIA LTD 51
BUILDSTRUCT NIGERIA LTD 52
CAPPA AND D'ALBERTO LTD 53
CHINA CIVIL ENGINEERING CONSTRUCTION NIGERIA LTD 56
DANTATA & SAWOE CONSTRUCTION COMPANY (NIGERIA) LTD 58
DELATTRE BEZONS (NIG) LTD 60
DUTUM COMPANY LTD 62
EL-ALAN CONSTRUCTION CO. LTD 64
GODSTAR ENGINEERING COMPANY LTD 66
HITECH CONSTRUCTION COMPANY LTD 67
ITB NIGERIA LTD 69
JULIUS BERGER NIGERIA PLC 71
LEE ENGINEERING & CONSTRUCTION CO. LTD 74
MERCURY MARITIME CONCESSION COMPANY LTD 76
MONIER CONSTRUCTION COMPANY (NIGERIA) LTD 78
MOTA-ENGIL SGPS S.A. 80
P.W. NIGERIA LTD 84
PRODECO ENGINEERING SERVICES LTD 86
REYNOLDS CONSTRUCTION CO. LTD 88
SAFKO CONSTRUCTION COMPANY LTD 90
SETRACO (NIGERIA) LTD 91
TECHNOVA AFRICA GROUP LTD 93
ZUTARI (PTY) LTD 95