Nigeria’s construction industry is expected to grow by 3.9% within the course of this year following a 7.7% decline last year, as a result of some containment measures and disruption caused by the COVID-19 pandemic.
The steep decline during the same period in oil and gas prices, which accounts for around 65% of the West African country government’s revenues, worsened the situation by further curtailing expenditure power on infrastructure.
According to GlobalData’s report dubbed ‘Construction in Nigeria – Key trends and opportunities to 2025-(Q2-2021)’, this industry is projected to post an annual average growth rate of 3.2% between 2022-2025, thanks to the federal government’s plan to invest in the West African country’s infrastructure and energy sector.
Key contributors to the foreseen growth
According to Dhananjay Sharma, an analyst at GlobalData, the expected passage of the long-pending Petroleum Industry Bill (PIB) may provide a much-needed impetus to Nigeria’s oil and gas sector, and in so doing create multiplier effects across the entire construction chain and the country’s economy at large.
Infra-Co, a public-private partnership that is focused primarily on Nigeria’s infrastructure advancement, and whose development was approved by President Muhammadu Buhari early this year, will also play a key role in Nigeria’s construction industry growth. Infra-Co has an initial capital of US$2.7B that will come from the Central Bank of Nigeria, the Nigerian Sovereign Investment Authority (NSIA), and the Africa Finance Corporation.
“Nigeria’s oil and gas construction projects have a combined value of US$ 139.6bn, 63% of which relates to projects in the pre-execution stages. If all projects proceed as planned and if the expenditure is evenly distributed over the construction phase, the annual outlay for 2021 is expected to be nearly US$ 8.2bn and it could even reach US$ 25bn in the next two years,” says Sharma.