Nigeria Infrastructure Report 2007

The Nigerian building, construction, housing and real estate industry accounts for 4-5% of the country's total gross domestic product (GDP), and represents nearly 70% of the national capital base. The state plays a dominant role in the industry. Yet, the industry has reported lacklustre performance due to a poorly enforced rule of law, high levels of corruption and political instability. Nigeria's economy reported growth of 7.5% in Q306. This comprised a 12% growth in the non-oil sector, which accounts for 7.3% of the country's total revenue. Nigeria's foreign exchange inflows reached US$16.6bn in Q306. The country is highly dependent on the oil sector that accounts for 53% of the total Nigerian revenues.

The government has outlined plans to establish a fund that would cater for the building and maintenance of road infrastructure in Nigeria. Also, the Federal Executive Council, in November 2006, approved about NGN7.2bn (US$56.33mn) for the construction and engineering designs of roads in Nigeria. Major infrastructure projects on the anvil in Nigeria include the US$8.3-bn railway line connecting Lagos to Kano; the US$8-bn Trans-Saharan gas pipeline linking Nigeria and Algeria; the US$6-bn Olokola liquid natural gas (OKLNG) project, and the US$3.5-bn Brass River liquid natural gas (LNG) plant.

Nigeria's oil production has been disrupted due to continued ethnic conflict and strikes. Periodic militant attacks in the Niger delta region have had a negative impact on the operations of the existing oil facilities as well as those under construction. Many construction projects have been stalled due to rampant corruption and bureaucratic inefficiency. Contractors working on government-owned projects are subject to frequent delays in payment. Moreover, the Land Use Act (introduced in 1978) restricted the supply of urban land and forces developers to follow complex procedures to obtain building permits. According to the act, the state is the owner of most of the country's land, which is held in trust on behalf of the people. However, tighter and enforceable building regulations, increased local cement production capacity and increased in investment levels could lead to recovery in the Nigerian construction industry. Nigeria was ranked last on the BMI's Business Environment Rankings matrix for the Middle East and Africa region. The country has the potential to become one of the largest construction markets in Africa if it gets rid of its endemic economic, social and political problems.