Current Forex Scarcity Presents Challenges, Potential Opportunities for Construction, Says NIOB

Bennett Oghifo

The current scarcity of forex in Nigeria presents presents challenges and potential opportunities in the nation’s construction industry, the Nigerian Institute of Building (NIOB) has said.

The President of NIOB, BDLR (SIR) Alderton Ewa Ewa, “As a Nation faced with the present impact of foreign exchange (forex) on construction, it is important to note that it is multifaceted, presenting both challenges and potential opportunities.”

The president, represented by the Lagos State chapter’s chairman, BLDR Adeoye T. Adeyemi, stated this at a press conference in Lagos to mark the Builders’ Day 2024, whose theme is, “The Role of Builders in Sustainable Housing Delivery.”

He said the challenges are, “Increased cost of imported building materials: A significant portion of construction materials in Nigeria are imported, and fluctuations in the exchange rate can drastically affect their prices. This makes project budgeting and cost control more difficult. An example can be seen in the recent cost of cement. 

“Limited access to foreign currency: Due to forex scarcity, construction companies might struggle to access the foreign currency needed to import essential materials, leading to project delays. Reduced investment: Uncertainty surrounding the forex market can discourage foreign investors from entering the Nigerian construction sector, hindering potential growth and innovation. Erosion of profit margins: Construction companies face pressure to maintain profit margins amidst rising material costs, potentially leading to compromises in quality or project delays.”

The potential opportunities, he said are: “Stimulation of local production: The high cost of imported materials can lead to the development and expansion of local production of building materials, fostering economic diversification and job creation.

“Increased focus on resource efficiency: The need to manage costs can lead to the adoption of more sustainable construction practices that utilise local resources and minimise waste. Enhanced innovation: Challenges can spark innovation, encouraging the exploration of alternative materials and construction techniques that are less reliant on imported materials.”

On the way forward, he said, is: Mitigating the negative impacts of forex fluctuations while capitalizing on potential opportunities requires a multi-pronged approach: Government intervention: Implementing policies that encourage local production of building materials, such as tax breaks and subsidies for manufacturers, can reduce reliance on imports. Promoting local content: Encouraging the use of locally sourced materials in construction projects through public procurement policies and awareness campaigns can further strengthen the domestic construction industry. 

“Embracing sustainable practices: Promoting and adopting sustainable construction methods that utilize local resources efficiently can contribute to cost reduction and environmental benefits. Diversifying the construction sector: Exploring opportunities for public-private partnerships and attracting foreign direct investments can inject capital and expertise into the sector, fostering innovation and long-term growth.” 

The president said, “By addressing the challenges and capitalizing on the opportunities presented by forex fluctuations, the Nigerian construction industry can become more resilient, sustainable, and less susceptible to external market volatility. 

“Overall, Builders are instrumental in driving the transition towards sustainable housing delivery by integrating environmentally friendly practices, materials, and technologies into the construction process, ultimately contributing to a more sustainable built environment for present and future generations.” 

He said, “Builders’ Day is a solemn reminder, a call to action, and a beacon of hope. Let us honor the victims of building collapse not with mere words, but with unwavering dedication to building a future where safety, quality, and sustainability are the cornerstones of our profession. 

“I urge all stakeholders, from policymakers and developers to homeowners and the general public, to join forces with the Nigerian Institute of Building in this crucial endeavour. Together, we can build a nation where every structure stands as a testament to our collective commitment to excellence and a lasting legacy for generations to come.”