Nigeria Infrastructure Report 2008

The Nigerian infrastructure sector has displayed impressive growth over the past few years. There has been a steady rise in construction expenditure in the country, primarily fuelled by growing oil revenues.

BMI forecasts the industry to grow at an average of 15.81% over the 2008-12 forecast period.

Development of basic physical infrastructure is high on the government's agenda. Most projects revolve around construction and restoration of roads and development of power plants. Refurbishment and expansion of the country's airports and railway network are also planned. Although a number of private construction companies operate in the Nigeria, the industry is largely driven by state-led investment. Most of the domestic companies are small by international standards and lack the competence to handle major projects independently.

The presence of corruption looms large over most sectors of the Nigerian economy. Players operating in the country often complain of opaque tender procedures. The industry also suffers from a lack of skilled manual labour, while managerial workforce in the country is relatively expensive. Another drawback is that contractors working on government-owned projects frequently face payment delays. Furthermore, the country is threatened by an unstable security situation, especially in the Niger Delta area.

Despite all odds, Nigeria has the potential to become one of the largest construction markets in Africa.

Moreover, increased investment levels, more stringent building regulations and increased cement production capacity could help fuel growth in the Nigerian infrastructure sector. The construction industry is forecast to be worth NGN660.96bn (US$6.01bn) by 2012. The industry's contribution to the overall gross domestic product (GDP) is, however, expected to remain quite low, averaging around 2% during the forecast period.