Overview

 Table: Total Market Size for Construction Sector, Unit: USD Millions

Total Market Size = (Total Local Production + Total Imports) – (Total Exports) 
Data Sources: National Bureau of Statistics; McKinsey & Company, Globaldata
Total Local Production: Estimated based on previous year’s trends
Total Exports: Estimated based on previous year’s trends
Total Imports: National Bureau of Statistics  
Imports from U.S.: U.S. Census Bureau 

Nigeria has a massive infrastructure deficit with total infrastructure stock in the country amounting to 30% of gross domestic product (GDP). This falls short of the international benchmark of 70% set by the World Bank. With Nigeria’s population growing at a rate of over 2.5% per year and an expected population of 400 million people by 2050, the current infrastructure in the country is likely to be overwhelmed. Some prevalent construction infrastructure challenges in the country include insufficient road networks linking commercial centers across the country and an insufficient stock of affordable housing.

The construction industry in Nigeria is expected to expand by 2.8 percent in real terms in 2024, supported by the government’s focus on infrastructure development to support economic development, public and private investment in the housing sector, and a strengthening of external demand. In the 2024 budget, the Government of Nigeria (GON) allocated $16.8 billion for capital expenditure of which $3.7 billion was allocated to the education sector and $2.2 billion to the health sector. The GON also allocated $922.2 million for road construction and $166.4 million towards the development of 20,000 affordable housing units in 2024. Over the remainder of the forecast period, the construction industry is expected to register an annual average growth of 3.1 percent between 2025 and 2028. This growth is supported by investments in electricity, transport, industrial, infrastructure, and oil and gas projects, coupled with the GON’s plan to produce 5.5 billion cubic feet of gas per day by 2030.

The World Bank estimates that Nigeria will need to invest $3 trillion in infrastructure to reduce the infrastructure deficit in the country. The government of Nigeria has begun to take steps towards reducing the infrastructure deficit through increased spending as part of a 30-year infrastructure plan (National Integrated Infrastructure Master Plan), which aims to bring Nigeria’s infrastructure stock to the 70 percent of GDP level by 2043. 

Both the GON government and private investors drive construction projects in Nigeria. The GON provides key infrastructure such as roads, bridges, dredged waterways and ports, and railways. These projects are pursued via government financing, public-private partnerships (PPPs), multilateral development banks (MDBs), and bilateral creditors. Due to the increasing cost of key infrastructure projects in the country and shrinking government coffers, the GON has made use of PPPs as a tool to finance projects where it was not able to secure debt financing. The Senate approved about $22 billion in external loans for key infrastructure projects in the National Infrastructure Master Plan. The housing sector is expected to account for 11 percent of this fund while transportation may account for around 25 percent. 

Recent data from the Federal Mortgage Bank of Nigeria (FMBN) as of January 2023 reveals a housing deficit at 28 million units, with an annual increase of 900,000 units, resulting in a major constraint to Nigeria’s ability to achieve sustainable development characterized by “no poverty”, “good health and wellbeing” by 2030.  The Central Bank of Nigeria (CBN) has estimated an amount of $46.7 billion is needed to finance the deficit, and with a growing population of over 227 million people, the current deficit is extremely high. It is estimated that the country needs to build a minimum of 900,000 houses per year to close this gap. In 2019, the Ministry of Works and Housing set aside a total sum of $463 million for the construction of 2,383 units of housing across the 36 states of Nigeria under the National Housing Program. 

The government has indicated commitment towards reducing the housing deficit in the country by proposing an additional $154 million for the housing sector in the 2022 budget. State governments have also embarked on projects aimed at providing affordable housing. Lagos state government via direct intervention has delivered 39 estates across the state, amounting to 10,060 units, with ongoing projects adding approximately 1,938 more units. Lagos State also launched multiple affordable housing schemes to cater to people with different incomes.  Other affordable housing initiatives can be found in Delta, Ebonyi, Enugu, Edo, Ekiti, and Gombe states, as well as the Federal Capital Territory (FCT).

The Nigerian Mortgage Refinance Company (NMRC) was established in 2013 to provide long-term funding to mortgage lenders and increase the availability and affordability of housing finance in the country. Refinanced loans by the NMRC grew to $18 million within the financial year ended December 31, 2023. Federal Mortgage Bank of Nigeria (FMBN) has 24,654 mortgages running, amounting to $86 million in August 2023. 

Private investors are active in the residential and business construction sectors. Commercial estates are being built by private investors to meet the housing demand of high-earners in high-cost areas across Nigeria. Property values in urban centers such as Lagos and Abuja can be high.

On the commercial side, Nigeria completed the $1.5 billion deep seaport in Lagos, which is expected to ease congestion at the country’s ports and help it become an African hub for transshipment, handling cargoes in transit for other destinations. The project, commissioned in 2022, cost $1.5 billion with a 16.5-meter water depth capable of berthing large vessels previously not serviceable in West African waters. This project has become a template for other states in Nigeria and some have begun plans for similar infrastructure projects to boost their local economies. The Nigerian government is increasing its efforts to develop infrastructure and recently created a $2.7 billion Infrastructural Corporation of Nigeria Limited fund backed by the Central Bank of Nigeria, Africa Finance Corporation, and the Nigerian Sovereign Investment Authority.

Major Ongoing Construction Projects in Nigeria

Project: Eko Atlantic
Location: Lagos, Nigeria
Project Cost: At least $6 billion.

Project: Dredging of the River Niger/Onitsha/Baro in-Land Port
Location: Niger, Delta, Kogi, Anambra, Imo, Bayelsa, Rivers and Edo
Project Cost: Approximately $280 million 

Project: Lekki Free Trade Zone
Location: Lagos, Nigeria
Project Cost: $700 million

Project: Abuja Millennium Tower
Location: Abuja, Nigeria
Project Cost: $333 million
 

Leading Subsectors

The construction equipment and building materials subsectors continue to lead the areas of opportunity in the construction industry. Heavy construction equipment such as dump trucks, excavators, dredgers, generators, and graders are in demand due to numerous ongoing projects. The equipment is bought new or used from manufacturers or dealers. Some equipment companies have implemented a lease-to-own service for their equipment. U.S. equipment is preferred in this subsector due to its durability and reliability, though price competitive Asian companies are competitors. Nigeria has substantial capacity with some building materials such as concrete, but those not available locally are imported. Several types of construction materials are deemed ineligible for official foreign exchange with the Central Bank of Nigeria. 

Opportunities 

The GON is planning to concession several road projects under the Highway Development and Management Initiative. This would be done through the Federal Ministry of Works and Housing and the Infrastructure Concession Regulatory Commission (ICRC). The rationale behind this initiative is to ensure private sector engagement to increase outside funding sources. 

For more information, e-mail: Banksharon Nwaneri, U.S. Commercial Service, U.S. Consulate General, Lagos, Nigeria at banksharon.nwaneri@trade.gov

Local Trade Shows
West Africa Property Investment Summit
July 22 – 23, 2024
Lagos Oriental Hotel, Lagos

BuildMacex Nigeria
September 3 –5, 2024
Eko Hotel & Convention Center, Lagos

The Big 5 Construct Nigeria
September 23 – 25, 2024
Landmark Event Center, Lagos