Repositioning the construction industry for economic development (II)

Continued from last week…


Repositioning of the NCI requires putting in place measures for the development and projection of the Nigerian construction professionals. In this regard, there is the need for Nigerian government to re-examine the way multinational construction companies are currently managed. Government should come up with policy that will influence the ownership structure of multinational construction firms in Nigeria. Nigeria should benefit from the experience of other countries. For instance the South Korean government enacted a Law known as Engineering Services Law (ESPL) which compels registered engineering firms in South Korea to have at least one South Korean Professional engineer. Israel also made effort to support its professionals by banning the employment of foreign engineering companies to do the works in Israel except where it is absolutely indispensable. Where it is necessary to employ the services of foreign firms, it is required that an Israeli should head the team. Brazil used Normative Act 15 of 1975 and other laws to ban the importation of building raw materials in addition to other measures meant to protect the Brazilian construction industry and its professionals. It is interesting to note the effort  made by government by passing a bill on the National Building Code, NBC and on Construction services of  2014 which is meant to give the indigenous construction firms a level playing field as their international counterparts, as well as, making it easier for local businesses to thrive in the industry. However, sincere and serious attempt should be made to ensure that all these positive efforts achieve the desired objective.                         

Policies to Improve Indigenous Construction Firms


It is a known fact that the demand for construction projects is basically what economics called ‘derived demand’. It is derived from the need for where to carry out important activities. This, in turn, largely depends on business activity, state of the economy as well as the level of interest rate. In view of the fact that government is the single largest client for the construction industry, government can introduce policies and programmes that can boost construction activities and the construction firms, which will have positive impact on the economy. For instance, the Nigerian governments can improve the participation and performance of indigenous contractors through increase indigenous contractor’s participation, special and systematized preference given to indigenous contractors so as to increase the participation of indigenous contractors. This is particularly important for at least, three reasons. First national interest; ideally, it is not all contracts that government is supposed to award to foreign or even, multinational construction firms. Secondly, awarding contracts to Nigerian construction firms will enable them gain experience and increase their competitive position. This will afford them the opportunity to compete with other construction firms all over the world. This especially relevant in view of the fact that many experts have observed that Nigerian Indigenous contractors have not had a fair share of major construction activities outside the country, as they are often awarded to their foreign counterparts who are considered more technically and managerially superior and efficient in funds acquisition and project execution. Thirdly, it will assist in reducing problem of unemployment. .

Another way and means in which government can use the NCI as a tool for economic development, is for government to create more suitable conditions for the industry to thrive; in this respect, government may wish to consider one of the two options proposed by experts:  One, is to centrally plan economic activity and intervene quite strongly. The other is to allow market forces to develop capacity organically. However, in this era of globalization, which is, characterized by liberalization of economy of nations the world over. In addition, economic activities are supposed to be free from institutional controls, there is the issues of free market mechanism, private enterprises, open competition, professionalism and excellence in corporate governance. In nut shell, globalization breaks down all barriers, separating nations and continents and thereby making the world a global village. This means Nigerian construction firms may have to compete with their counterparts all over the world. Thus, direct government involvement of government appears to be the best way that the NCI can move forward. Government should consider among others, the following: Specified training of local personnel, differential taxation of foreign and local firms and offering tendering preferences to local firms, measures to assist local enterprises to compete with their foreign counterparts, putting limit on the number or value of contracts that foreign firms can execute in a specified period. Government should give the indigenous construction companies all the necessary support to practice in abroad.  

Construction Materials and Equipment Development   

Unwholesome dependence on imported inputs such as construction materials, machinery, and the skilled manpower required to implement much-needed infrastructure for economic growth and to improve the living conditions are very serious problem facing the NCI. In view of the fact that materials constitute the single largest input in construction often accounting for more than half the total cost, added to the fact that substantial part of the materials used are imported, there is the high need for stepping effort in the development, application of indigenous and even exportation of construction materials. Since Nigeria is blessed with the raw materials for the production of many of the construction materials, comprehensive study of the development of materials most especially, where Nigeria will have comparative advantage in producing such materials should be carried out. Government should seriously re-examine its policy on the issue trade of liberalization, especially in relation to construction materials. 

The use of modern construction plants and equipment as an important pillar for the application of modern construction techniques should be promoted. This can be achieved if government encourages as well as give all the necessary support for the establishment of firms that owns, manage and lease the equipment to construction companies. Nigeria should boost the development of construction plants and equipment.

Modern Construction Techniques

In view of the dynamic nature of construction work, the survival and success of construction firms largely depends on their ability to keep pace with the latest development in the industry. Thus construction professionals in Nigeria should possess high absorptive capacity, innovative ideas, knowledge and skill of recent construction methods. There is the need for government to examine modern development in the construction industry all over the world and identify new construction techniques as well as come up with training initiatives from time to time, for Nigerians. In addition, construction firms should be encouraged to sponsor researches. Government can delegate such responsibility to the proposed Construction Industry Development Board.       

Provision of Infrastructural Services

The construction of houses and Infrastructural facilities are indispensable to man. There is no doubt that provision of infrastructural facilities is necessary and very important prerequisite for sustainable economic growth. Since government is responsible for the provision of infrastructural facilities – hospitals, schools, roads, airports and ports, dams, etc., it can strategically position the NCI as a regulator of the economy through making sincere and very serious attempt to improve on the quality and quantity of the infrastructural facilities. This will consequently, have positive effect on the attractiveness, competitiveness and economic growth of Nigeria.  To really appreciate the foregoing statement, just study a construction site and see the number of economic activities that spring up around it, whenever there is construction work. 

Nigeria should make deliberate and concerted effort to situate the NCI as a major pillar for economic and social progress. It is my sincere belief that Nigeria has what it takes to transform the NCI to a well-developed vibrant construction industry, which is at par with the ones in the most acclaimed iconic countries.

Danwata is an Associate Professor at the Department of Building, Ahmadu Bello University, Zaria;,  08022601115.

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