Business in Nigeria - Construction

The construction business in Nigeria is a Multi billion dollar industry with hardly any year falling short of expected windfalls befalling successful contractors who bid for construction projects, the last 5 years has witnessed increasing patronage and profits for most construction companies in Nigeria.

This is especially seen with some publicly quoted companies like Julius Berger Plc, Costain West Africa Plc and G. Cappa Plc which have recorded steadily rising profits with the last two just recovering from years of consistent loses.

Recently a number of development projects by government and private sector companies have created opportunities for construction companies to reap massive revenues.

For instance, in recent times in most states of Nigeria infrastructural projects like road reconstruction, housing projects, bridge building, construction of drainage, dams, rural electrification, city expansion and beautification projects among others have been on the increase especially in Lagos, Rivers and Akwa Ibom states where massive amounts of money running into tens of billions of dollars have been voted for capital projects.

Opportunities

Nigeria has large expanse of undeveloped Land requiring road construction to link many parts of the country with other parts and construction of low cost housing to accommodate many of its city dwellers.

Also that many state governments are coming to terms with the importance of sticking to Master plans and town planning laws means that in coming years many large scale construction projects will be embarked upon.

Major infrastructure like good road networks, that will support development are lacking and hence is a major cause of inadequate foreign investments.

Of recent, crude oil deposits have been found in some parts of Nigeria implying that very soon infrastructural work would begin in surrounding areas. However, this is also dependent on security as the Niger delta is highly notorious for security threats from Militants.

Telecommunications companies are always embarking on expansion or maintenance projects this affords many construction companies opportunities to maximize income. Infrastructural and Development Projects (Mega city project)

Most state governments have realized that foreign investment is only possible when an enabling environment such as one with sufficient infrastructure exists.

Of all places in Nigeria, real estate investors are taking position in prime locations like Ikeja, Lekki and Ikoyi constructing commercial and residential buildings like Luxury Apartment buildings, office buildings, Mini estates, Hotels and Event centers.

Refuse collection and disposal has always been a problem in Lagos hence the government partnering with the private sector in managing refuse collection and disposal. Even at that, Lagos is still far from having efficient refuse collection and disposal centers. Electricity supply is currently below 40% capacity.

Damaged Infrastructure

In 2000, the domestic terminal 2 of the Murtala Muhammed International airport was gutted by fire. This afforded the construction industry an opportunity to build an operate a general aviation terminal with the successful bidder, Bi-courtney Nig. Ltdgranted licence to operate the terminal for 20 years.

The Abuja Airport is under a similar arrangement with the Abuja Gateway Consortium building airport facilities which it would also operate for 25 years.

Many such instances exist with government owned buildings or infrastructure requiring maintenance or repairs. Such opportunities are usually money spinners for Investors in the construction industry.

Challenges and threats

Corruption is still an issue in deciding government contracts as many top government functionaries try to manipulate bidding and award of contracts in their favour or that of their cronies. But that is gradually taking a back seat as most contracts these days are usually based on merit unlike in times past.

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