How to resolve fiscal policy impact on construction sector
Amid uncertainty in the nation’s foreign exchange regime and other fiscal policies, built environment professionals have called for urgent steps to address the growing unemployment rate and job losses in the construction sector.
They agreed that except some contradictions in the Nigeria’s economy is successfully resolved, the construction sector, which is a barometer to measure economic success will continue to remain uncertain, thereby creating private investors’ reluctance to ramp up the industry.
Speaking at the 9th yearly distinguished lecture of the Lagos State Chapter of the Nigerian Institute of Quantity Surveyors (NIQS) held in Lagos, on the theme: “Foreign Exchange Problems. Prospects and Solutions in Nigeria: Construction Industry Perspectives”, president, Commonwealth Association of Surveying and Land Economy (CASLE), Mr. Olusegun Ajanlekoko expressed worries that the malaise has caused uncertainty on cost projections in the construction industry.
According to him, “until we start producing our materials, we will continue to be at the mercy of those who product for us.” The economy, he said cannot be run like that because the cost of construction has gone astronomically high, leading to unemployment, lack of incentive for investors, skill reductions,while innovations continue to go down.
He stressed that professionals are no longer coming out with innovations as they continue to manage what they have. “With constructions shrinking in sizes and number, many hands are chasing fewer jobs and the cost is uncertain,” he said.
Mr. Ajanlekoko, who was a past president, NITP, suggested that builders should adopt bricks in the construction than sandcrete blocks to ensure affordable housing. “We have large residue of clays in the country, with demands and economic of scales, it seems cheaper, reduces the cost of cements, and can build more.
According to him, it is irresponsible for any nation who cannot put a roof over its citizenry . He then appealed to the Central Bank of Nigeria (CBN) to give discretionary interest rates to active participants in the construction industry to reflect on the overall cost of housing.
For the Director, Property Development at UACN Property Development Company (UPDC), Mr. Yemi Ejidiran , the uncertainty in foreign exchange regime has caused delays in some on-going projects, while some others are being slowed down or stopped with new entrants practically fizzling out .He said that Grade A and B commercial residential buildings are witnessing low or poor demand, with no new development, while the dollar rated houses are evaporating.
Ejidiran called for the local production of the finishing building materials in Nigeria, adding if most of the building materials are sourced locally, it will reduce pressure on dollars since the real estate is seriously affected by the liquidity fleece .
As a means of survival in this critical time, he said “it is time to reduce over head cost, outsource services , lease materials and avoid omissions in order to remain competitive. It is unthinkable that many big construction firms are even reducing profit margins as survival strategy , while adopting easy designs to conserve funds .”
Contributing , the president, Nigerian Institution of Estate Surveyors and Valuers, Dr. Bolarinde Patunola-Ajayi looked at the international conspiracy against the foreign exchange dynamics , saying there is need to identify the real population who are really in need of housing.According to him, there are influx of foreigners , who are compounding the housing problems even as the uncertainty in foreign exchange regime is deliberately orchestrated from outside to prevent Nigeria from being self reliant.
Providing a synopsis on the impact of the foreign exchange to the nation’s economic activities, a renown economist and Managing Director of Allied Technol System Limited, Mr. Henry Boyo noted that CBN’s failure to successfully manage an irrepressibly surplus naira supply has continued to drive higher inflation rates for several years, with serious consequences for the purchasing power, consumer demand, productivity, investment and social welfare.
According to him , if the problem of persistent excess naira liquidity which fuels inflation remains unresolved, Nigeria, will remain a dumping ground for imports.
He lamented that with an abiding tradition of systemic surplus naira liquidity driving higher inflation, it would be presumptuous to expect any economic succour from the critical monetary indices, which sustain inclusive economic growth.
The renowned economist solicited for the payment of dollars allocations with dollar certificates, so that dollars will always remain domiciled in CBN, even after banks have purchased the certificates in a free market, outside the present monopolistic framework, from constitutional beneficiaries.
The banks would subsequently sell their dollar purchases in an open market (devoid of naira liquidity surfeit) to local importers to pay for only approved and attested import bills. The commercial banks would subsequently instruct the CBN to directly pay such overseas suppliers from the forex credit balance in the respective bank’s forex domiciliary account with CBN on presentation of validated shipping documents; obviously banks would resist any attempt to maintain such transparency in the forex market.
According to him, such arrangements will however, minimize round tripping, currency hoarding, multiple exchange rates and the misadventure of funding bureau de change with official dollars etc. The list of positives to the economy is endless, but the pains to the oppressors who make stupendous gains from the current arrangement, will become sweet relief for all other Nigerians.
Earlier, NIQS president, Mrs. Mercy Iyortyer , who was represented by the deputy President, Obafemi Onashile extolled the Lagos branch for sustaining the yearly lecture, saying it benchmark how an individual can see your contribution to the running of the economy.