This is not the best time for accommodation seekers and home builders in Nigeria as price of reinforcement bar popularly known as ‹iron rod› has risen by 229.1 per cent to N395,000 from N120,000 per ton in April 2020.
Besides, prices of other building materials such as cement, roofing sheets, sandcrete blocks, granite and sharp sand have also skyrocketed in the market.
According to the market survey by Nigerian Tribune, prices of a 50-kilogramme bag of cement (Dangote, Bua, Lafarge, Eagle cement etc), a major building materials component, now cost between N3, 200 and N4, 000 in the market from N2, 450 in February 2020, depending on locations.
Major hike in cement price represents between 30.61 per cent and 63.2 per cent increase in 14 months.
Also, sandcrete block of six and nine inches, which were selling at N150.00 and N180,00 respectively in the first quarter 2020 now sell at N200.00 and N250.00 in the market.
From the major building materials’ market in Lagos, 20 tons of relatively soft sand cost N85,000; 20 tons of sharp sand–N65,000; 20 tons of granite – N120,000; 20 tons of quarry dust filling-N120,000; and 20 tons of laterite filling – N40,000 respectively.
Also the cost of aluminum roofing sheet (0.55mm thick) ranges between N2,000 and N2,500 per square metre (sqm).
As a result of astronomical rise in the prices of building materials across the country, many stakeholders are expressing fear of imminent abandoned housing projects and increased homelessness among Nigerians.
As housing experts are raising the alarm over the negative implications of astronomical increase in building materials’ prices on accommodation seekers, home builders and cement distributors have laid the blame on the doorstep of manufacturers, while the latter have attributed volatile forex, uncontrolled inflation at 18 per cent, logistics problem and dubious activities of middlemen and retailers as major causes.
Worried by the situation, built environment professionals warned that, with the current rise in building materials› prices, it might be difficult for Nigeria to bridge the housing deficit of over 17 million units in the next 20 years.
Chairman of the Board at Lagos Building Investment Company (LBIC) Plc and Founder/Chief Executive Officer, Eximia Realty Company Limited, Mr Hakeem Ogunniran, raised the alarm over the increasing building materials’ prices, especially reinforcement bar on the housing stakeholders’ whatsapp platform, saying “Hello my people on this platform. Have we noticed that the price of reinforcement is now N395,000/metric ton as at this morning? As at February last year, the price was N120,000/metric ton? What are we doing?”
Ogunniran pointed out that macro fundamental limit to affordable housing provision is forex.
“For example, before COVID-19, reinforcement was selling for N120,000 to 130,000 per metric ton as at February 2020. We went into lock down, by the time lockdown was lifted in October, 2020 reinforcement price rose to N230,000. Later N350,000. That is just crazy! It is absolutely crazy.
“You cannot be talking of affordable housing and government expects you to build affordable housing the same way you built other commercial houses. You cannot just be left in the hands of the market,” he said
To be able to produce affordable housing units for the generality of Nigerians, the Eximia boss said there was need for concerted efforts and recognition by government to create the needed synergy and enabling environment.
“Anywhere in the world, look at success stories, it is a coalition of government, development institutions, bankers and developers, creating a collaborative platforms with incentives here and there. But if I have to buy my land in the open market like everybody, going through approval, input my cost, pay like everybody, it is difficult to deliver affordable housing.
“So the fundamentals we have to look at are the environment and the regulatory framework,” Oguniran said.
However, Dangote Group has said that cement price from its factories is between N2,450 and N2,510 per bag, vat inclusive, adding that the price was in line with or lower that prices across West Africa.
Dangote’s Group Executive Director, Strategy, Portfolio Development & Capital Projects, Devakumar Edwin, revealed that, while a bag of cement sells for an equivalent of $5.1, including VAT in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes.
He said that though the company has direct control over its ex-factory prices, it cannot control the ultimate price of cement when it gets to the market. He advised that it is important to distinguish Dangote’s ex-factory prices from prices at which retailers sell cement in the market.
“Over the past 15 months, our production costs have gone up significantly. About 50 per cent of our costs are linked to USD, so the costs of critical components like: gas, gypsum, bags, and spare parts have increased significantly due to devaluation of the Naira and VAT increase.”
He further explained that the demand for cement has risen globally as fallout of the COVID-19 crisis.
One of Dangote’s cement retailers in Magboro, Ogun State, who did not want his name in print, said he did not buy as the price being stipulated by the company.
According to him, his gain on a bag of cement selling at N3,400 is just N100.00, saying he did not buy at N2,450 nor N3,000 from his distributor.
Another expert, who identified himself simply as ‘Evocati’, said that except something urgent is done to arrest the nation’s rising inflationary trend, it might result in endless number of abandoned projects.
“Already, in many cases, very wide variations are manifesting between agreed Bill of Quantities (BOQ) provisions and current market prices of building inputs. Very urgent intervention is required to arrest this.”
Managing Director of Fesadeb Group and the promoter of Abuja International Housing show, Mr Festus Adebayo, stated that the current prices of building materials are biggest threat to the delivery of affordable housing in the country, calling on professionals’ bodies to intervene.
Former Managing Director, Lagos State Development and Property Corporation (LSDPC), Mr John-Bede Anthonio, an architect, said: “Nothing can be done to reduce prices with the Central Bank of Nigeria (CBN) helping inflation to 18 per cent. Only God can help us.”
Managing Partner, Fonahanmi Idris and Associates, Mr Fonahanmi Idris, blamed the situation on forex, high cost of freight, increased custom duty, VAT increase, logistic and poor road challenges
According to him, a major driver of imported materials’ prices is foreign exchange, noting that Ajaokuta Steel Company was in comatose and not producing iron sheets/rods, adding that for this reason, Nigerian has to rely 100 per cent on imported iron rods.
“The CBN official exchange rate is $1.00 per N379:00; Bureau de Change (BDC) exchange rate is $1.00 per N483:00 and foreign currency transfer exchange rate is $1.00 per N520:00,”he said
Idris pointed out that when aforementioned are fixed, prices of building materials would come down automatically.
But Anthonio, in a swift reaction, said it would be difficult to fix the foreign exchange market when the whole economy of Nigeria is unproductive coupled with insecurity, power and infrastructural deficit.
Project Director, C-STEMP Skill Training, Anthony Okwa, said that time has come to step up the use of local alternatives
”NBRRI and other relevant research institutions as well as the Building Materials Producers Association of Nigeria (BUMPAN) & SMEDAN should step up to take advantage of this opportunity of local alternatives for affordable housing,” he said.
Chairman, HOB Estate Limited, Chief Olusegun Bamgbade, stated that prices of building materials and other items would continue to rise as long as Naira depreciates against the dollar.