Construction materials play a major role in the construction industry as its these materials that are put together to erect construction outputs (Structures). Generally, its evident that there has been a 5% - 15% hike in cost of construction materials, most especially in the retail sector.
See infographic highlighting some materials, their previous cost and present cost.
The reason behind the current hike in cost of construction materials is not far-fetched;
- Coronavirus - The world was put at a standstill because of the pandemic and this however influenced the reduction in importation of some materials and in turn law of scarcity took its cause.
- Increase in power supply and fuel costs - a new pump price for petrol took effect in Nigeria on the 2nd of September 2020. Thereby, causing the cost of production to increase as industries in Nigeria majorly depend on alternative sources of power (generators) and Logistics of this materials to the point of use has also influenced the rise in cost of construction materials.
- Imbalance of foreign exchange rates- Due to the high volume of imported construction materials and its demand, there have been a rising demand for foreign exchange. This has weakened the Naira t N450 against the U.S Dollar.
- #EndSars Protest – Due to the recent end sars protest over the country, the after effect of properties looted and destroyed, this has also influenced the hike in cost of construction materials.
However, this will impact hugely on the construction industry as it will birth;
- Variation in Contracts
- Increase in project abandonment
- Reduced volume of construction outputs
- Downward effect on the gross domestic product (GDP) of Nigeria’s economy.
This will therefore have a ripple effect in the cost of construction in general i.e. cost of homes to be purchased; thereby making the governments goal of Housing for all by 2020 unachievable.