…As rise in prices of building materials skyrocket
By Olakunle Olafioye
Major ongoing building projects in the country are currently stalled in complete departure from what is obtainable in the previous years.
Building experts are quick to blame the continuous rise in prices of building materials for this setback, which most project owners are anxiously expecting to crash. Therefore, deadlines for completions and handover dates of most projects are now being shifted forward.
Mr Yusuf Olayiwola, a local building contractor, said that the astronomical rise in the cost of building materials has dealt the nation’s construction industry a huge blow in the last few months.
Among the few projects Olayiwola is handling currently is the construction of a three-bedroom apartment at Atan-Ota, Ogun State.
The project which was started about two years ago, it was gathered, was estimated to cost N18 million.
The project, according to him, was abandoned early last year following a land squabble in the community where the building is sited.
The building in question was abandoned almost half way, having already gulped over N8 million. Olayiwola said that the land controversy which initially necessitated the hiatus was finally resolved late last year with the re-commencement of work billed for last January.
“But by the time we finished the re-evaluation of the cost of completing the project, we discovered that it had spiraled to almost N20 million, an increment of over 100 per cent considering the fact that we had a balance of about N10 million left to work with before we left the site in 2022,” Olayiwola said, pointing out that there would still be a need for another re-evaluation of the contract sum whenever the owner is ready, given the further rise in the prices of building materials in the recent weeks.
Prices of major building materials, including cement, iron rods, granite, sand, roofing sheets, floor and wall tiles, plumbing materials, among several others, have been on the rise consistently with the dealers blaming the development on inflation in the country.
For instance, the price of a 50kg bag of cement, Sunday Sun learnt, rose from N4,800 in less than a year to around N10, 000 depending on the brand and location of the supply.
Similarly, the price of a ton of 12mm iron rod skyrocketed from N446,400 to N1,162,500, a difference of over 200 per cent within the last one year while prices of sand of various types have equally gone up by over 40 per cent. Floor and wall tiles of various sizes and brands, findings by Sunday Sun equally revealed, have risen by almost 50 per cent.
The implication of the astronomical rise in prices of building materials is indeed far-reaching.
The majority of building project owners are said to be abandoning their projects in anticipation to continue when the prices of these materials fall.
Those who have the courage to proceed are said to be doing so at a snail speed, leaving construction workers idle and in precarious situations.
Mr David Whesu, an aluminium fabricator, told Sunday Sun that the hike in prices of aluminium materials has compelled most building owners to suspend their projects as aluminium materials have jumped up by over 50 per cent.
“Look at casement windows which cost between N50,000 and N60,000 last year, for example, it is now N120,000 each. A sheet of aluminium board which we used to buy at the rate of N11,000 before now is now N28,000.The people are abandoning their projects because of the rise in the costs of these materials because everybody is now concerned with meeting their basic needs of food, healthcare and their children’s education first before any other thing,” he said.
The situation is indeed a double-whammy of setback for construction workers who, besides being rendered idle by the development, also find themselves in a precarious situation of not being able to fulfill their financial obligation to their respective families.
“We are now at the point where we now have to literaly hawk our services. Construction workers-bricklayers, carpenters, welders, tilers and other unskilled workers, wake up, pack their tools and roam construction sites in search of people who might need our services. It is as bad as that now,” Whesu lamented.
Halting ongoing construction projects may not be totally a sound decision as most analysts opined that the prices of building materials may not crash anytime soon as many have envisaged.
A developer and building engineer, Abdulazeez Isiaka, said that past experience does not support the belief that the prices of building materials would ever return to what they used to be again.
“In my over two decade experience as a developer, I cannot recall any time in the past when prices of building materials rose and crashed later.
“The best that could happen, in my opinion, is the marginal reduction we have seen with the prices of some building materials, like cement, for example, which went up to around N13,000 from around N5,000 some months ago and which is now being sold between N9,000 and N10,000.
“My advice to people is that rather than suspend their projects indefinitely in anticipation that prices (of building materials) would crash, they should rather spend what they have on whatever the available money can cover for now,” Abdulazeez admonished.
Signs that the price of cement and other building materials may not crash any time soon have continued to multiply in the last few weeks.
Federal Government’s earlier appeal to cement manufacturers in the country to crash the price of the product has not only failed to yield tangible result, but has also resulted in a blame game, generating bad blood between the manufacturers and the government, thereby giving indication of despair to Nigerians who had anticipated a positive outcome from the engagement between the government and cement manufacturers.
Shedding more light on the reasons behind the hike in the price of cement, Muda Yusuf, chief executive officer, Centre for Promotion of Private Enterprises (CPPE), in a statement last week, blamed the situation on a number of factors, which he said were beyond the control of cement manufacturers.
The CPPE boss noted that cement production was highly energy intensive with gas being the major energy source and added that the humongous cost of logistics, funding, inflation and other economic variables had huge implications on the production and operational costs of cement manufacturing.
“Gas is priced in dollars for manufacturers in the country, and they sell their products in Naira; the implication of that for production cost is better imagined, especially in the light of the plunge in the value of the naira.
“Admittedly, the risk of profiteering increases with monopoly powers in any economy and in any sector and this risk exists in the Nigeria cement industry as there are few dominant players. But this is a regulatory issue located within the framework of the Federal Protection and Competition Act of 2018. The Federal Competition and Consumer Protection Commission (FCCPC) has a responsibility to ensure compliance with the Act to ensure the protection of the interests of the consumers and the public.
“Meanwhile, the current ex-factory price of cement by the major players is less than N7,000 per bag. It follows that pricing issues and the culprits could also be within the cement distribution chain over which the manufacturers have limited control,” the CPPE boss stated.
Undoubtedly, the implication of skyrocketing prices of building material is grim for a nation like Nigeria, which is currently grappling with a huge housing deficit estimated at 28 million at the end of 2023.
Experts in the building industry are of the opinion that the housing gap in the country may worsen in the months ahead.
“The major fallout of the skyrocketing prices of building materials is that people will have to pay more for accommodations since more and more people will be competing for the available limited accommodations. Secondly, and perhaps more worrisome is that desperate house owners and builders may resort to the dangerous option of cutting costs, using cheap and substandard building materials for their projects, which of course, is the major reason for the incidence of building collapse in this country,” Abdulazeez stated.
A development economist, Prof Tayo Bello said that major projects being undertaken by the government at all levels are also likely to be stalled due to the rising prices of building materials.
“It means that the government will have to go into re-negotiation of the contracts they awarded before. If a contract was estimated to cost N20 million before now, definitely, it will now go up to about N80 million . And since the government works with a budget, the projects may have to be suspended until the government has the money to continue with them,” he stated.