LAGOS– Current reports have it that a bag of cement sell for between N10,000 and N15,000 in different parts of the country. A year ago, a bag of cement sold for less than N4,000. The price of other building materials have also gone astronomically high.
Prices of sand, nail, granite, roofing sheets, window and door frames, wood, iron rods and other building materials have also hit the rooftop with suppliers blaming foreign exchange, transport, and logistics costs.
Real estate developers have started to abandon projects. Individuals who are building personal houses are gasping for financial breadth. We are in the most uncertain and troubling times.
The instability of the foreign exchange market has negatively altered the business of real estate purchase and delivery in Nigeria. The government has to do something urgently to stem the tide. Housing is one of the basic necessities of life. As the government work assiduously to tackle the prevalent food crisis, the housing deficit must not be allowed to spiral out of control.
The Minister of Housing and Urban Development, Architect Ahmed Dangiwa recently called for a meeting with manufacturers of cement and other building materials in the country. The move was aimed at better understanding the challenges in the sector, sharpening measures to mitigate the rising cost of building materials in the country and finding sustainable ways to address them.
The minister lamented the high cost of building materials despite the abundance of its raw materials in the country. He also queried the recurring disproportionate increase in the price of cement in particular, especially considering that cement producers in the country source virtually all their raw materials locally.
According to the Minister, “It is disheartening to see how much Nigerians have to pay for essential building commodities like cement, with the prices rising almost on a daily basis. I don’t understand the reason for this increase, and it is not acceptable.
“The manufacturers should explain to Nigerians their reasons for such incessant hikes.
I know that the cement producers source their raw materials in Nigeria; limestone, clay, silica sand, gypsum, iron ore, and the rest. These minerals abound in Nigeria and these manufacturers get them here, so there is no justification to try and blame it all on the rise of the dollar”, he said.
The Minister further assured of the commitment of the administration to providing decent and affordable shelter and liveable communities to low- and medium-income earners, as well as the vulnerable in society. He said the government will create a conducive environment for the private sector to thrive, including through ensuring building materials are affordable and accessible.
The Ministry of Housing in January inaugurated the Building Materials Reform Task Team as part of efforts to develop the building materials industry through the creation of Building Materials Manufacturing Hubs in each of the six geopolitical zones of the country.
The Minister said while the hubs are yet to come on stream, there is a need to continue to interface with players in the industry such as building materials manufacturers in a bid to promote affordability.
While the Federal Government is making efforts to unravel the gloom behind the galloping prices of building materials through mediation and other fact-finding interventions, it is important that sustainable and enduring measures should be undertaken to stem the tide.
ENCOURAGE LOCAL ALTERNATIVES
For almost every building material that is sourced in Nigeria or abroad, there is a more affordable alternative locally. At the global level, different solid wastes generated in large quantities are used as full or partial replacements for conventional materials in many developed countries.
For instance, ashes from industrial and agricultural wastes such as fly ash and rice husk ash are used as ‘pozzolan’ to partially replace cement in concrete production. Most of the alternative materials are cheap and are abundantly available in Nigeria.
They also do not compromise strength and durability properties of the concrete. Research has also shown that the structural behavior of reinforced palm kernel shell concrete (PKSC), has lower density (24% of normal concrete), increased compressive strength (14% higher), with lower modulus of elasticity and flexural strength which were 33% and 15% of normal weight concrete (NWC), respectively. In addition, bamboo is said to be a very strong fibre that is used as reinforcing material.
The compressive strength of bamboo is two times higher than that of concrete, while the tensile strength is close to that of steel.
Listing interventions at making use of local materials to reduce cost of building materials in Nigeria, the director-general, Nigerian Building and Road Research Institute (NBRRI), Prof. Samson Duna recently said the council has launched cement-stabilised bricks technology.
According to him, the use of the material reduced the cost of construction drastically. “NBRRI has also developed building materials like pozzolana, mardotile roofing and varieties of machines for their production. The products reduce the cost of production of mortar and concrete, reduce heat of hydration and reduction on effects of alkali aggregate reactivity,” he added.
Similarly, the director-general, Raw Materials Research and Development Council (RMRDC), Prof. Hussaini Ibrahim recently said the council is presently collaborating with the New Material Nigeria Company Limited, a member of the China National Building Materials Group (CNBM) wholly owned by the government of China which has introduced a new innovative construction material known as ‘fibre cement board’ into the Nigerian market.
According to him, this makes Nigeria the first country outside China where an alternative to gypsum board is being manufactured. “The fibre cement board is resistant to weather, water and fire. It is sound proof, shatter resistant, flexible, termite-resistant and costs lower than normal bricks.
The fibre cement board is made out of a composite of cement, cellulose fibres like paper pulp, quartz and sand. They are used in building construction of walls, partitioning, roofing and flooring. It can be used for internal wall partitioning as well as exterior wall cladding.
I strongly believe these initiatives amongst others will substantially reduce the price of building materials in Nigeria. Also, they will save the nation more than N2trillion on annual basis in foreign exchange equivalent if the projects are commercialized and well-funded by government.
It will generate more than 50,000 jobs in the country and make building of houses easier for the local populace. These will facilitate increase in the contribution of the sector to GDP. For these initiatives to be maintained and sustained, the government as a matter of urgency must create appropriate means for delineation and implementation of research results.
In addition, there is need for a policy that will enhance private-sector participation in the commercialization of these research efforts.
ADREESS IMMEDIATE CONCERNS OF CEMENT MANUFACTURERS
Few days ago, the Minister of Works, David Umahi’s met with cement manufacturers where they agreed to reduce the price of a bag cement to N7000. The cement manufacturers had said the high cost of gas, high import duty on spare parts, poor road networks, high foreign exchange rates and cement smuggling to neighboring nations are some of the issues causing the astronomical rise in price of cement in the country.
While the Federal Government has said the Federal Ministry of Industry, Trade, and Investment will seek remedies from President Tinubu regarding gas costs and import duties, the Federal Ministry of Works will prioritize road repairs, especially around manufacturing locations.
The government has also said regarding cement smuggling, the Ministry of Works will intensify engagement with the National Security Adviser, Nuhu Ribadu anticipating a price drop after addressing these challenges and will reconvene in 30 days to review progress of the matters discussed.
Representatives from Dangote Cement PLC, BUA Cement PLC, Larfarge Africa PLC and members of the Cement Producers Association were present at the meeting. My submission on this is that the government should get more intentional about resolving the concerns of the cement manufacturers. It should not be the usual talk without action.
This is the time to talk and do. The target should be for cement to drop to less than N5,000 per bag.
CONSIDER TAX AND IMPORT DUTY WAIVERS
For building materials that are imported into the country, this is the time for the government to start looking at tax and import waivers or rebates. According to the Nigerian Building and Road Research Institute, Nigeria imports about 90 per cent of the materials used in the construction of buildings and roads across the country.
The reality of this fact is that importers of these products need support at this time of extreme forex crisis while we work towards encouraging and developing local production.
PARTNER WITH REPUTABLE REAL ESTATE DEVELOPERS
The government at all levels must immediately start looking at sustainable and actionable partnerships with reputable real estate development companies. The partnership can come in the form of financial grants, land allocations and facilitation of proper documentations and titles to their properties.
One of the best ways to work with the private real estate developers is to get the Real Estate Developers Association (REDAN) involved. As a body of real estate developers in Nigeria, REDAN will be able to facilitate shared resources, intelligence, materials and encourage collaborations amongst members that can engender affordable development and delivery homes to Nigerians. In the business of real estate development, experience shouldn’t be discountenanced.
The Federal Mortgage Bank of Nigeria and the Federal Housing Loan Board must rewrite and review their operational models. Realistic and accessible housing schemes should be developed for middle- and low-income earners using the Private Public Partnership models with competent real estate developers. Housing products for this class of Nigerians have become almost impossible. The eligibility criteria should be reviewed.
The pricing should be subsidized and the government must approach housing for Nigerians as a form of social investment. In the United States of America for example, the Department of Housing and Urban Development (HUD) administers the Self-Help Homeownership Opportunity Program (SHOP), which is a competitive federal grant program that awards funds to eligible nonprofit organizations to help develop affordable housing units for purchase by low-income families.
In Nigeria, it cannot and should not be about profit making. Substantial amount of funds saved from subsidy removal from petrol can be channeled towards building houses for the poor. The time to act is now.
Segun Oshundairo is a Real Estate Developeer and the CEO Arc-View Investment Limited
