Elections outcome holds key to growth of construction industry 

OBASI CHUKWUDI is a structural engineer and chief executive officer of OBCHUKSUM Engineering Nigeria Limited, which has a good reputation in the construction sector. The firm handles individual,  corporate and government construction projects mainly in the South East,  South South regions, but also in other parts of the country. He sat down with Business A.M’s SABY ELEMBA recently to provide an outlook of the construction sector, and said while the sector generally recorded a three percent growth in 2022, the outcome of the 2023 general elections and what the government that will be in power will offer Nigerians will determine its outlook this year. Below are excerpts:  

Engineer Chukwudi, how would you describe the performance of the construction sector 2022 compared to 2021, particularly in the  South East region of Nigeria? 

In 2022 there was a slight growth generally in the construction industry but the growth was not as expected when compared to 2021. I think we had something like a three percent growth. While we saw this marginal growth, there was also a lot of lapses, lapses in the sense that there was also a decline because generally when you talk about construction industry you talk about local and foreign.

Were there new investments into the sector? 

You will discover that most of the investors in the construction industry did not invest more in 2022. Why they didn’t invest was that there were  a lot of uncertainties in the country. Uncertainty in the sense that there was  general insecurity.

Secondly, there were a lot of changes in the prices of building materials because there was a  lot of instability in the prices of construction materials  in the entire country.

You can only invest in a business that you can actually predict, for instance, that maybe in 2023 or thereabout, you can start to reap the profits. But there were a lot of uncertainties, especially in the prices of commodities. So, most people didn’t make a lot of investments in 2022. And so, the growth was very, very minimal. But generally, there was  a little growth, but not as  expected.

When you talk about insecurity as one of the factors that affected the construction sector’s performance in the country and most especially in the Southeast part of the country,  one would like to know how?

Now, here we are in the Southeast; there are the challenges posed by the dreaded ‘unknown gunmen’ that always unleash untold havoc on the people in the region. They maim, they kill innocent people, they assassinate, destroy, not only individual properties, corporate organisations’ properties, but those of the government also.

You also see the challenge of kidnapping, where those engaged in this evil act kidnap for ransom. Oftentimes, their victims are killed even after collecting the money,  some of their victims are being tortured to death.

There is this issue of IPOB (Independent People of Biafra) also. Here in the South-East, the weekend starts on Fridays and ends on Mondays. Even on Tuesdays, work doesn’t even go well. Even when you programme that your work should start on Mondays,  you find out that banks in the South East do not open on Mondays. So, there is a lot of insecurity and uncertainties. So many jobs were lost, so many jobs were delayed and so many job hours were lost as result of the sit-at-home order by IPOB.

Even the businessmen in the region are scared. Look at Dangote Cement Company; at one stage it refused to supply cement because of insecurity. So, the insecurity affected prices of building materials. And so the market price was not based on what you had in mind  but  the prices were determined or based on what those who had the items wanted or could sell them. So there were no supplies because of insecurity  and uncertainties. Those that had stocked the materials could keep on hiking the prices. And ab initio, you as  a builder, did not consider the challenge  and the hike in prices.

How did such uncertainty affect jobs or contracts your company handled? 

Now, you find a job which you have already cost, let us say  N10 million, and by the time you might have finished the job you are running almost to N13.5 million. And so the job would take almost everything you could have gotten as profit.

What do you predict for this year, 2023, for the construction sector? 

In 2023, I believe things will be better. But there may also be the common uncertainty due the upcoming general elections in the country. Nobody can actually predict the future of the country because of the elections.

Now, things are stagnant in the county. Why things are stagnant is due to the fact that nobody can predict what will happen even immediately after the elections. And so you find out that from this January to February this year,  nothing much will happen in the construction sector because investors are looking forward to seeing the outcome of the elections,  to  see which government will take over before they can invest or not.

So, depending on the outcome of the election, whether it will be peaceful or not then that will determine the outlook for the sector in 2023. But there would be growth assuming the election is peaceful and if prices of materials stabilise. The growth will surpass the three percent recorded in 2022 depending on the outcome of the election.

Another thing is the government that will be in power; what it will offer, what it will achieve in terms of security and stabilising the country. So prediction depends on what will happen in the country.