On Wednesday in Abuja, the Federation of Construction Industry (FOCI) issued a stark warning that Nigeria’s construction sector is confronting a severe funding crisis. In a statement signed by President and Chairman of Council High Chief Vincent Barrah and Director‑General Fidelis E. Imoisili, the body said inadequate and unpredictable financing is forcing contractors to suspend projects, operate at markedly reduced capacity, and, in many cases, halt work altogether.
Funding shortfalls and payment delays
FOCI attributes the slowdown to a widening gap between budgetary allocations and the actual release of funds for infrastructure projects. Many contracts were awarded without multi‑year funding arrangements, leading to delayed payments, accumulation of certified debts and, ultimately, the suspension of works. “The major challenge confronting the construction industry is inadequate and unpredictable funding,” the federation said.
Impact on workers and the wider economy
The funding crunch has translated into significant job losses. FOCI estimates that about 41,800 workers have been affected – roughly 1,000 senior staff and 40,800 junior staff – with knock‑on effects on families, market traders and the broader economy. The federation warned that the multiplier effect of these layoffs could deepen Nigeria’s economic challenges.
Contractual and cost pressures
FOCI also highlighted contract‑related problems, noting that the Ministry of Works has terminated several agreements by “mutual consent” after funding shortfalls stalled execution. The body called for stricter compliance with the Standard Conditions of Contract and for a coordinated review involving the Bureau of Public Procurement, the Council for the Regulation of Engineering in Nigeria, the Nigerian Society of Engineers, the Federal Ministries of Works and Justice, and FOCI itself.
Rising input costs have further strained contractors. Prices for cement, steel, bitumen, diesel, equipment and spare parts have surged following the naira’s depreciation, while borrowing costs remain high, with bank lending rates ranging from about 20 % to 46 %. These factors increase financing costs and erode working capital.
Call for urgent intervention
“We therefore use this medium to call on all relevant stakeholders to intervene urgently in this dire situation to save the Construction Industry from total collapse,” FOCI said.
The federation urged immediate action to secure funding certainty, improve payment discipline, revise contract pricing mechanisms to reflect inflation and foreign‑exchange fluctuations, and strengthen project administration. It reaffirmed its members’ commitment to delivering quality infrastructure, emphasizing that without reliable financing the sector’s long‑term potential cannot be realized.
<small>Source: Punch Nigeria — read the original story there.</small>