Nigeria - Construction Equipment Nigeria - Construction Equipment
Overview
| 2016 | 2017 | 2018 | 2019 (estimated) | |
| Total Market Size | 877,580 | 878,282.06 | 962,522 | 974,725 |
| Total Local Production | 217,580 | 217,754.06 | 238,640 | 265,225 |
| Total Exports | 75,900 | 75,960.72 | 83,246.35 | 90,500 |
| Total Imports | 660,000 | 660,528 | 723,882 | 800,000 |
| Imports from the U.S. | 161,920 | 162,049.54 | 177,592.39 | 195,000 |
| Exchange Rate: 1 USD | 199 | 314 | 360 | 361 |
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Sources: National Bureau of Statistics website; McKinsey and BMI Research. Total Local Production: Building Materials (Cement, Wood, Iron Rod)
Total Exports: Cement, Wood, Iron Rods
Total Imports: National Bureau of Statistics website: www.nigerianstat.gov.ng;
Imports from U.S.: Censtats and Trading Economics.
As a major step towards steering further away from its past recession and striving to reclaim its status as Africa’s biggest economy, the Nigerian federal government has earmarked about 30% of its 2018 budget on infrastructure projects. The capital expenditure would provide a stimulus for the construction industry and gear toward housing development. Through this budget, the federal government hopes to address significant need for infrastructure ranging from housing to roads for nearly 200 million people. Currently, the country has a total national road network of about 200,000KM, linking all the thirty-six states, the federal capital and the nation’s major sea ports, which are inadequate to meet the growing demand for more houses and better transport links. As a result, the federal government has increased the budget for road construction across 12 states, from $232 million (N73 billion) in 2016 to $254 million (N80 billion) in 2017.
The government has also provided nearly half a million dollars (N150.8 million) for construction of access roads in Delta state (Asaba) and Anambra (Onitsha). In 2018, the Government of Nigeria earmarked about Eighty-Six Million USD (N31 Billion) to the construction of the Second Niger Bridge, billed to be a major trade route for the inhabitants of the South-East, a major trade hub for Nigeria.
In July 2016, President Muhammadu Buhari announced the Government of Nigeria’s commitment to the ongoing implementation of National Integrated Infrastructure Master Plan (NIIMP), which is a 30-year strategic infrastructure development project initiated under former President Jonathan. The $3.05 trillion strategic plan is a joint project of federal and state governments, as well as the private sector, supported by the Country’s Sovereign Wealth Fund with a goal to improve the country’s stock of infrastructure until 2043. Both federal and state governments are expected to provide 52% of investment, while the private sector contributes 48%. At the same time, the federal government plans to continue its three-year plan aimed at completing 6,000 kilometers of road projects, champion delivery of affordable housing units, and strengthen policies that would increase private sector participation and ownership. Further, the Government of Nigeria will continue to leverage the National Policy on Public Private Partnership (PPP) strategic initiative to complete and manage multiple development projects, including the Second Niger River Bridge at Nupeko and development of free trade zones and seaports in Lekki (Lagos), Akwa Ibom, Abia and Ondo States. It would further deploy this model in the development and granting concessions for high trafficked and interstate road networks to facilitate transportation of food items, raw materials and finished products between local communities and urban centers across the six geo-political zones.
In continuing to address increasing demand for housing and deliver on its political campaign promises, the Government of Nigeria plans to roll out a $3.2 billion (N1 trillion) real estate fund to provide housing in meeting the 17 million residential deficit, which requires 700,000 new homes each year to meet this demand. To this end, the government is working to increase home ownership by improving access to credit facility and reducing cost for low income housing. In March 2017, the federal government announced plans to waive an initial 10% payment on mortgages below $15,800 (N5m) administered by Nigeria’s government-owned Federal Mortgage Bank (FMBN) to enable low income earners access $18,000 mortgage facility at 19% interest rates. In September 2016, the federal government introduced Family Homes Fund, and this $1.57 fund is intended to keep mortgage rates affordable under 23% targeting 9.99% payable over 20 years. Prospective buyers are required to make initial down payment of 10% to qualify for these home loans. In 2018, the Government of Nigeria, through the National Pension Commission (NPC), and to stimulate the housing/mortgage finance sector, held a series of stakeholder meetings aimed at reviewing the impact of allowing contributors to the Retirement Savings Accounts (pensions) access and utilize part of their pension contributions towards payment of equity for residential mortgage for home acquisitions. These guidelines will be reviewed by stakeholders including Nigeria’s apex bank, the Central Bank of Nigeria (CBN), and once concluded will be made public. Many states have joined in building affordable homes for their growing populations. Private real estate developers are constructing homes for resale to Nigerians in the key cities of Abuja, Lagos, Port-Harcourt, Ibadan, Uyo, Calabar, Asaba and Owerri. In Lagos, the construction work on a new model city, Eko Atlantic City, has advanced to completion of major milestones of the project. These include unveiling of the first completed Eko Pearl Towers, which are the residential buildings in its Marina Districts in November 2016, with some residents already inhabiting the facility; the commissioning of 8-Lane Eko Boulevard city road; completion of 14 bridge structures of phases one and two of the project; ongoing construction of its ultra-modern water system; and proposed completion of the Black Pearl and Champagne Towers in 2017. Another major real estate development project, achieved through a Public Private Partnership (PPP) between the Lagos State government and a private developer, Rendeavour, is worthy of note. Alaro City is a new mixed-use satellite city in Lagos located in the North West quadrant of the Lekki Free Trade zone, billed to tackle the country’s housing deficit and also decongest major cities such as Lagos. Alaro City would serve as a model modern city development and as a catalyst for increased private sector investment in the housing sector. According to industry experts, satellite cities remain the best way to accommodate population growth while maintaining urban plans and preserving green spaces. Over the last 10 years more satellite cities had emerged as a means to tackle the problems created by congestion, pollution, and high housing costs in large metro cities such as Lagos. For a country like Nigeria, with extreme housing shortage, satellite cities are critical in taking some weight off bloated urban centers, especially when built as market-led mixed-use developments. Alaro City is designed to provide housing for around 100,000 residents and facilities for 30,000 daily visitors. It currently hosts some major developments including a facility within 54,000 square meters which is already operational, and another facility under construction.
Other states in Nigeria, including its capital Abuja, are planning on copying the Atlantic City concept and establish these cities in their states.
Beyond real estate development, and as a critical part of its diversification drive, the Federal Government of Nigeria is encouraging private firms to engage in mining activities for which heavy construction machinery will be needed. The U.S. is the market leader in construction equipment but is facing stiff competition from Chinese and European firms who offer prospective buyers’ financial incentives in the form of cheap financing and often lower prices. The Nigerian construction and mining companies favor U.S.-origin equipment because of their reliability, durability and availability of spare parts and technical personnel to maintain them in-country.
Leading Sub-Sectors
Imports of construction equipment, and heavy construction machinery (dredges, graders, dump trucks) used and new, will continue to be fueled by the desire of contractors to own and operate their own equipment rather than lease from other contractors which has considerable associated costs.Nigeria’s Delta region continues to attract much attention in the areas of dredging, access roads and home construction. U.S. manufacturers of heavy construction equipment such as dredges, cranes, excavators, swamp buggies, quarry and asphalt plants (especially used) will find the Nigerian construction equipment market very lucrative and attractive. U.S. manufacturers of prefabricated homes will find a ready market in the Nigerian building and construction industry given the need for affordable housing, and the speed associated with turning around housing projects. Construction companies should plan to participate in the vast construction of new homes, towns, air and sea ports and repair/reconstruction of roads and other infrastructures in several states of Nigeria. The Government of Nigeria as part of its 2018 and 2019 budgets approved millions of dollars for the concessions, renovation and/or construction of several government owned buildings. One of such buildings is the Department of Petroleum building to be located in the nation’s capital, Abuja, which is billed to be a multi-story project with multi-level parking, amongst others.
Opportunities
Following the steady growth in Nigeria’s construction industry, the following opportunities exist for U.S. companies in the construction sector:-
- Construction of new green field (or newly developed) projects
- Construction of a Golden Triangle Super-Highway (proposed 4 to 6-lane super-highway) that will connect key economic hubs and add additional 5,000 km to the national network of roads in Nigeria
- Construction of the Second Outer Ring Road (4th Mainland Bridge) to decongest traffic from the Lagos metropolis and increase evacuation of goods from Lagos Sea Ports
- Improvements of existing highway alignments
- Construction of new towns to de-congest Lagos and Abuja metropolis which provide residential and office accommodations for residents
Construction companies should plan to participate in the vast construction of new homes, towns, air and sea ports, and repair/reconstruction of roads and other infrastructures in several states of Nigeria.
Web Resources
National Bureau of Statisticswww.nigerianstat.gov.ng
U.S Census
Punch Newspaper Online – DPR HQ Construction
Punch Newspaper Online – Property Registration
Punch Newspaper Online – PPP Projects
Punch Newspaper Online – Construction Environment
Punch Newspaper Online - Concessions
Channels Television News Online
For more sector information, e-mail: Adesina Anthony A., U.S. Commercial Service, U.S. Consulate General, Lagos, Nigeria at Anthony.Adesina@trade.gov
Anthony plans to promote and/or lead Nigerian buyer delegations to:
- NAHB’s International Builders' Show (IBS) circa Feb 19-21, 2020, Las Vegas, NV.
- World of Concrete (WOC) Jan. 21-25, 2020, Las Vegas, NV.
Local Events:
- Nigeria Build Expo, Landmark Center
- West Africa Building & Construction Nigeria, Landmark Center
- Africa Build
- USA FAIR 2020: ACCESS NIGERIA (April 28-30, 2020 - TBC)
Eko Convention Center, Victoria Island, Lagos.
Organized by the US Commercial Service exclusively for American exhibitors to meet thousands of prospective Nigerian businesses.
(Please contact Anthony.Adesina@trade.gov for more information)