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A new report from Timetric’s Construction Intelligence Centre (CIC) has found that Nigeria's construction industry will continue to expand, with investment in infrastructure construction to drive growth
According to the report, the outlook for the Nigerian construction industry is positive. The industry’s output value is expected to rise at an annual average of more than nine per cent in the next five years, having already posted annual growth close to 12 per cent during the past five years. Consequently, the industry is expected to increase from US$56.1bn in 2015 to US$88.2bn in 2020, measured at constant 2010 US$ exchange rates.
The expansion of the Nigeria’s construction industry is expected to be primarily driven by infrastructure development. To address the infrastructure deficit in the country, the government increased the total spending on the improvement of Nigeria’s road, rail, airport and other related infrastructure by around US$ five billion in its 2016 budget. Overall, the government is planning to set up a US$25bn fund to improve the country’s infrastructure by 2020.
In turn, the infrastructure construction market is set to grow due to the government’s plans to expand the country’s rail network to increase trade activity and enhance economic development through various programmes – such as the 25-year strategic rail vision and rail modernisation programme.
As a result, the government is introducing new bills to encourage private investors to invest in rail infrastructure. In 2015, Benin, Nigeria and France's Bolloré Group signed an agreement to upgrade the 438 km Cotonou-Parakou line and to construct the 574 km line to connect Niamey with Ouagadogou.
Infrastructure construction is the largest market in the Nigerian construction industry, accounting for nearly 30 per cent of its total value in 2015. Timetric expects the market to maintain its position, and to record annual growth (in nominal terms) of 19 per cent in the next five years, to the value of NGN 7.6tn (US$26.1bn) in 2020.