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Experts lament impacts of inflation on construction industry

By Nkechi Onyedika-Ugoeze, Abuja
14 April 2022   |   2:45 am
Key players in the construction industry under the aegis of the Federation of Construction Industry (FOCI), yesterday, lamented that the steep rise in inflation, high cost of diesel

An attendant sells diesel to a motorist at a filling station at Warewa, along Lagos Ibadan expressway, Ogun State, southwest Nigeria, on March 14, 2022. – From Nigerian airlines to Malawi bakers, African countries are feeling the pain of Ukraine’s crisis as supply disruptions hike inflation and oil prices push up fuel costs.<br />Global oil prices touched ten-year highs of more than $100 a barrel soon after Russia invaded Ukraine, doubling diesel prices for African countries like Nigeria.<br />Ukraine and Russia are both major suppliers of wheat and grains to Africa and Western sanctions and disruptions are already hiking costs across the continent. (Photo by PIUS UTOMI EKPEI / AFP)

Warn about impending job loss

Key players in the construction industry under the aegis of the Federation of Construction Industry (FOCI), yesterday, lamented that the steep rise in inflation, high cost of diesel and power as well as taxation are killing the sector.

According to the Federation made up of contractors and consultants, the situation is further compounded by the variation of prices (VOPs) in ongoing projects, which is pegged at five per cent. The band, they said, is unrealistic in light of the current inflation rate.

They warned that construction firms may be forced to disengage workers, which would worsen the unemployment situation in the country.

Speaking at the Construction Industry Business Roundtable on Appropriation Act 2022 in Abuja, the President of the Nigerian Institute of Quantity Surveyors (NIQS), Mr. Olayemi Shonubi, called for an urgent action to salvage the situation. He observed that the industry is the biggest employer of labour and that many households would face a crisis if any construction firm shut down.

He said: ” The purpose of this meeting is to identify challenges facing the sector and find ways to engage the Federal government to get the problems solved. We also want to engage the National Assembly on the issue of taxation so that in the drafting of the 2023 Finance Act, they would consider the sector.

“The way the taxation system has been structured, you find out that the players pay more than what is stipulated. Up to about early this year, I used to buy diesel at about N400 per litre, but now it is over N700 and this additional cost mean that your profit has been reduced…

“Nigeria has been losing about 90 per cent of revenue that is supposed to form a cash backing for the budget. If we are not able to stem the loss in oil production that will affect the cash that will be available to finance the budget. We have in the past one month had challenges with power, and without power, there will be no production.

“If government can find a cash backing for the budget, it will impact the construction industry and other sectors. To attract private investment to the construction sector, the environment has to be conducive, in terms of taxation and access to credits.”

Also speaking, the President of FOCI, Nasiru Dantata, said the recent inflationary trend has become a great concern for members, adding that between January and March 2022, the prices of basic materials have jumped several points over their prices at the beginning of the year.