Nigeria attracted $3.96 billion
(about N780.12 billion) on real estate development in 2014, which is 11 percent
of the total sum of $36.4 billion expended on infrastructure construction projects
in the country
Data recently released by Deloitte
African Construction Trends report placed Nigeria at the top of West African
countries in major infrastructure construction projects in 2014, with the
country spending $36.4 billion on major infrastructure construction projects
for the year 2014. The total expenditure includes both foreign and local as
well as public and private sector investment.
Investment has been on the rise
following the re-basing of the country’s gross domestic product (GDP) to $509.9
billion in April 2014. According to the report, the projects range from Water
which took 39 percent, Energy and Power (17 percent), Oil and gas (17 per-
cent), Transport (15 percent), Real Estate (11 percent) and Manufacturing (1
percent).
“Whereas South Africa was previously
the choice market in Africa for scalable operations, Nigeria now has a more
attractive profile, offering scale and strong growth,” Deloitte said in the
report. Yet the country faces some lofty hurdles if it is to realise its
required infrastructure developments.”
The report noted that West Africa
exhibited a strong level of growth with the total value of projects under
construction increasing from $50 billion to $75 billion year-on-year, although
there was no change in the number of projects qualifying for the report this
year. Although the region still accounts for just half of the level of
investment in Southern Africa, it is starting to close the gap, consistent with
Nigeria’s new title as the biggest economy in Africa.
Deloitte further noted that South
Africa has significantly more value in projects under construction or development
than Nigeria does, showing that while a market may have scale and growth, it
also needs a stable business environment, which Nigeria struggles with.
According to the report, reforms and
development plans implemented by the Nigerian government are beginning to take
effect, with the privatisation of the state-run Power Holding Company of
Nigeria virtually complete and an increasing number of Public Private
Partnerships (PPPs) entering the market.
There is also significant activity
underway in Lagos (the commercial capital), which accounts for more than 60
percent of non-oil GDP. “Some of the more noteworthy moves in the country have
been the breaking ground on a second Niger Bridge. It could boost the Nigerian
construction industry, improving East-West trade and helping to progress the
nascent PPP model,” the report said. The transport sector where Chinese
companies dominate could also emerge as one of the strongest sources of growth
for the Nigerian construction industry over the medium term, according to
Deloitte.
Two projects that demonstrate such
dominance are the $1.49 billion Lagos to Ibadan railway contract, which has
been awarded to China Civil Engineering Construction Corporation (CCECC), and
the Olokola Deepwater port project, awarded to the China Ocean Shipping Group.
Other noteworthy projects are the Bonga NW Project, Eko Atlantic City, Lagos
Light Rail, Abuja Light Rail in the Federal Capital Territory and Abuja
Centenary City.
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