Recent data has shown that the level of construction activity has fallen to its lowest level in almost two years.
According to statistics provided by industry insight expert ‘Glenigan’, the value of projects that started in the three months leading up to the end of June was the lowest it had been since the summer of 2020.
The closely followed Glenigan Index, which does not include independent investments exceeding £100 million, showed 130.8 in June, a decrease of 15% from May and a decrease of 27% from June 2021.
It represents the largest year-over-year reduction in activity since September 2021 and the third rolling quarter in a row where new work levels have plummeted.
The rate of inflation worldwide has reached a record level. In the Middle East and West African region most especially in Nigeria, where prices of goods and services had begun to rise in early 2021 due to growing consumer demand, disruptions in global supply chains, and rising energy prices, this pattern was already well-known. Due to an increase in the price of building materials, for instance, housing delivery has been affected.
There was an exponential increase in prices of cement, iron rod and other building components recently, which could become a stumbling block for low-cost housing in the country.
Other financial constraints, such as decreased wages and increased taxes, that are impacting consumers’ finances and changing their spending habits have added to price increases.
For instance, the price of cement has experienced about 30 percent increase between April and August 2022 as a bag which sold for N3, 600 at the beginning of April now goes for N4,200.
In the southeast and northern parts of the country, the price is as high as N4, 500 per bag. The increase has also impacted cement-based products like blocks and concrete rings among others.
Similarly, the average price per ton of TMT iron rods rose from N335, 000 to N420,000, which is about a 36 percent increment.
Reacting to the development, an iron rod dealer at Gudu market, Oparo Osita, blamed the incessant increase in prices of building materials on low home-based production capacity, leading to increase in the price level of imported products.
He said: “Most of the companies we have in Nigeria are owned by Chinese and Indians. If we have a larger number of companies owned by Nigerians producing these building materials using localized raw materials, I think it will be more beneficial because the fact remains that the Chinese and Indians are only here to exploit and make huge profit.”
Narrating his ordeal, Chinedu Anthony who sells plumbing and electrical materials, said that the cost of transporting his goods has drastically increased since January, owing to the increase in the price of diesel.
According to him, as of 2020, a bundle of electrical pipe (20mm, half inch) was sold at about N20,000 while it is sold now at the rate of N40,000.
Also speaking, Okanga Dike, a Cement seller, while expressing dissatisfaction over the current price of cement, noted that despite the fact that cements are produced in Nigeria using localized raw materials, the prices remain on the high side.
He noted with regret that most neighboring countries having their cement supply from Nigeria purchase cement products at cheaper rates compared to Nigeria where the products are manufactured.
“As of last year, it was so terrible. For other countries like Ghana, Zambia, and other countries, at that time, we were buying Dangote cement here for N3,800 or N3,900 and we sold at the rate of N4,000 to N4,200, while they were supplying other countries at the rate of N2,500. All these things have been happening and you can’t tell me that Dangote is not aware.It is the meeting that they had together. Look at now, we are buying I think two months ago at the rate of N3,900 but as I speak with you, we buy at the rate of N3,600 from the company and getting here, we sell for N3,800. There is no profit there. We are just doing the business because that’s our source of income and most importantly, we don’t want to fail our customers,” Dike lamented.
Meanwhile, in a counter reaction to the speculations revolving around Dangote Cement price variations in Nigeria and other African Countries, National Sales Director, Dangote Cement Plc, Funmi Sanni revealed at the 16th Africa International Housing Show (AIHS) that Dangote Cement is not cheaper in Ghana or any other African Country than in Nigeria.
According to Sanni, the company operates in different economic climates, adding that it has a cheaper price margin compared to other competitors.
“The cost of infrastructure in Nigeria directly affects the transportation of goods. We have greatly cut down on our carbon emissions by introducing less harmful materials during production. Cement is not going up at the rate other building materials are going up. However, to produce cement, a lot of energy is consumed”, she said.
While calling on the Federal Government to create an enabling environment for home-based businesses to thrive, the building materials sellers urged government to formulate and implement policies and action that will engender and promote home-based investment, as well as reduce the interest rate on imported products, to quench the scourge of abrupt price increase of building materials in the country.