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The rising value of constructing supplies is triggering deserted initiatives, posing important threats to the development sector, and exacerbating the prevailing housing deficit hole, JOSEPHINE OGUNDEJI writes
The current surge in cement costs has reverberated all through the actual property market, sparking an sudden improve in property abandonment.
Cement, as a elementary constructing materials, has seen its costs skyrocket resulting from a mix of things, together with provide chain disruptions and heightened demand. This surge has positioned appreciable pressure on each property builders and owners, resulting in a worrying development of deserted properties.
For property builders, the spike in cement costs presents a formidable problem. The elevated building prices pressure builders to grapple with the choice of both absorbing the extra bills, risking diminished earnings, or passing them onto shoppers by larger property costs.
In areas already battling affordability points, such value escalations additional compound the challenges of accessing homeownership, doubtlessly dampening demand.
Householders, alternatively, discover themselves burdened with escalating upkeep and renovation prices on account of the cement worth surge. Many owners at the moment are confronted with the dilemma of whether or not to put money into expensive repairs or abandon their properties altogether. For some, the monetary pressure of maintenance outweighs the perceived worth of their properties, resulting in a rising variety of deserted properties throughout numerous communities.
Final the years
Sunday PUNCH findings confirmed that the costs of cement ranged between N3,300 and N3,500 in Lagos and Ogun states in March 2021 however jumped to between N6,500 and N8,000 in each states as of the primary week of February.
Dangote Cement’s Group Government Director answerable for Technique, Portfolio Improvement, and Capital Initiatives, Devakumar Edwin, had in 2021 attributed the excessive value of cement in Nigeria to the worldwide rise in demand for cement on account of the COVID-19 disaster.
“Nigeria isn’t any exception as a mix of financial coverage adjustments and low returns from the capital market has resulted in a major improve in building exercise. To make sure that we meet native calls for, we needed to droop exports from our just lately inaugurated export terminals, thereby foregoing greenback earnings,” he mentioned.
In 2022, the Block and Concrete Producers Affiliation, Enugu State chapter, decried the continual improve within the costs of cement and different supplies used for block manufacturing.
The President of the affiliation within the state, Igwe Ukaegbu, had lamented that the continual rise in cement worth was negatively affecting the manufacturing output of and earnings of members of the affiliation, urging the Federal Authorities to intervene within the scenario by granting extra licences to industrialists to supply cement.
“The problem we’ve got is the price of cement and even sand. Every little thing is now expensive. We do not make gross sales as we used to; so, we’re struggling. We’re praying for the federal government to assist us by bringing down the costs of cement and different supplies.
“Earlier than, one might promote 3,000 to five,000 items of block in a month; however now, earlier than you promote 1,000 items of block, it is extremely troublesome. The price of cement in Enugu now could be N4,550 per bag. Some individuals are promoting for N5,000.”
In 2023, the Cement Producers Affiliation of Nigeria warned that the continuing plan of the Federal Authorities to introduce concrete roads might increase the value of cement to N9,000 per bag from the present worth of N5,000.
Additionally they referred to as on the present administration, in a press release, to completely deal with the perennial cement worth hike drawback by facilitating bigger participation within the cement business, noting that Nigerians had no enterprise shopping for cement for greater than N5,600 per bag.
The assertion learn partially, “Our findings from numerous components of the nation present that cement sells for as excessive as N6,000 per bag within the wet season. Our prediction is that it’ll promote for over N9,000 per bag within the dry season, particularly with the pronouncement of the Minister of Works on cement expertise and the marching order on housing by Mr. President if the federal government doesn’t take proactive steps.
“Whereas we commend the minister’s place on cement-made roads, we warn of the dire penalties if the provision finish isn’t correctly addressed. It will quantity to a dereliction of obligation to not intervene, and the time is now.
“To do in any other case is to proceed in a worsening pipe dream that costs would abruptly drop on this important enter that may proceed to empty the purse of Nigerians, render them homeless, encourage chaos between demand and provide, and worsen the infrastructure deficit it units out to treatment, and result in an unprecedented worth hike.”
Nevertheless, in 2024, the hopes for diminished building bills for aspiring owners may flip right into a distressing actuality, contemplating the current surge in cement costs initiated by producers final week.
This uptick has already set off a sequence response available in the market, resulting in over a 100 per cent improve in costs inside a short while. Consequently, some property builders have ceased their building initiatives, and people developing their residences are pursuing variations of their contracts.
Findings by our correspondent confirmed that operators throughout the Cement Producers Affiliation of Nigeria elevated the costs of the product. Consequently, retail costs elevated from N7,000 to N9,500, and N13,000 nationwide as of Wednesday, February 21, 2024.
Builders groan
A bricklayer, Asumo Tyler, instructed Sunday PUNCH that he was shocked when he realised that he needed to pay N6,500 or N7,000, relying on the world, for a similar bag of cement he purchased at N5,300 the earlier week, a growth he mentioned had halted his hope of proudly owning a house.
He mentioned, “I’m at the moment constructing my home. I needed to cease constructing due to this improve, I used to be initially considering the value would come down, until the shock I obtained upon buy final week.”
Equally, the Chief Government Officer of Magnificent Selection Providers Venture and Engineering Ltd, Jeremiah Akinsele, mentioned his agency needed to cease all of the initiatives it was engaged on presently, renegotiating phrases with the purchasers concerned.
He mentioned, “It has been troublesome as we needed to cease all works for renegotiation functions, all constructing supplies gone up. We purchased cement at N7,300 on Wednesday, February 7, in Sagamu, Ogun State. The complicated half is that a lot of the parts of cement are sourced domestically; I have no idea why the impression of the greenback is so enormous on the rise.
“As the costs of building supplies soar, exemplified by the surge in iron costs from N500,000 to N800,000, there’s a looming threat of initiatives being deserted. That is particularly troubling as we proceed striving to bridge the housing deficit hole.”
In an unique interview with our correspondent, the President, African Actual Property Society, Kunle Awolaja, mentioned the rise would deliver up the price of building.
He mentioned, “As soon as building goes up, it’ll impression rents and property developments available in the market. Nevertheless, the way in which ahead is as soon as the overseas change difficulty comes down, we go for native uncooked supplies.
“That is the place the difficulty is available in. What are the native uncooked supplies we’ve got? Are we going to work with clay, and may we’ve got mass manufacturing of those native supplies? For now, the reply can be no. We should always work with what we’ve got.”
Additionally, the Managing Director of Fame Oyster & Co. Nigeria, Femi Oyedele, mentioned since cement constituted about 50 per cent of the constituents of constructing supplies and constructing parts in Nigeria, the rise would result in an abandonment of properties.
He mentioned, “Blocks are for walling, plastering and rendering of partitions, screeding of flooring, fixing of tiles, fixing of sanitary wares, and so forth. The rise in cement from N5,500 to N7,000 will have an effect on the speed of building begins. A number of potential property builders will hesitate to start out building and this will even have an effect on gross sales of constructing supplies. In the long term, it can have an effect on the rental worth of properties.
“The uptick in cement costs is anticipated to result in an increase in deserted properties, as quite a few people already amid building initiatives might choose to stop their endeavors. Moreover, low-income earners might hesitate to embark on building of their properties given the present financial situations.”
Inflation
Nevertheless, in accordance with findings by Sunday PUNCH, cement firms, together with BUA which had beforehand introduced a discount in ex-factory cement worth to N3,500 per bag in October, reversed course and elevated their charges resulting from a surge in manufacturing prices.
A cement seller in Ogba, Lagos, Segun Abiola, identified that the rising transport bills and the devaluation of the naira have been key components behind the surge in costs. He highlighted the restricted authority that sellers possessed in figuring out pricing.
In the meantime, a cement vendor within the Iyana-Ipaja space of Lagos, Moshood Alimi, who revealed {that a} bag of Dangote cement was bought at N6,800 and Lafarge at N6,700, lamented his incapacity to inventory cement as a result of exorbitant value of transporting them to Lagos, which he mentioned would inflate the value per bag to as excessive as N7,500.
A constructing contractor, Seun Afolabi, whereas voicing his considerations over the detrimental impression of the cement worth surge on the development sector, highlighted the plight of aspiring owners who at the moment are discovering it more and more difficult to afford the upper costs.
The story isn’t completely different from the expertise of a developer, Opemipo Awoyeye, within the Sagamu space of Ogun, who acknowledged that as of Monday, February 12, cement costs had skyrocketed to N8,000 per bag, signifying a considerable surge in value.
In the meantime, one other developer based mostly within the Obalende area of Lagos, knowledgeable Sunday PUNCH that cement costs fluctuated between N9,000 and N9,500, relying on the placement, as of Friday, February 16, 2024.
Housing deficit stays
The quantity required to fund the housing sector in Nigeria and bridge the estimated 28 million housing deficit throughout the nation is N21tn, the Federal Authorities mentioned by the Financial institution of Business.
In a report on Nigeria’s housing sector put collectively by BOI, the financial institution defined that “with a rising city inhabitants, rising building prices, and declining family earnings, entry to inexpensive housing is turning into harder for hundreds of thousands of residents.”
The report, titled, “Institutional turnaround for the subsequent degree,” and obtained by our correspondent from the Federal Mortgage Financial institution of Nigeria, acknowledged that whereas N470bn was what the Federal Authorities budgeted for housing in 2022, the sector would require trillions of naira to shut Nigeria’s housing hole.
It acknowledged that of the estimated 206 million individuals in Nigeria, about 95.1 million lived beneath the poverty line, and as such it was troublesome for them to have entry to their very own properties.
Beneath the part on Nigerian Housing Market within the report, the financial institution mentioned, “N21trn (is the) quantity required to fund the housing sector,” including that “28 million items (is the estimated) housing deficit.”
Operators react
Following the current uptick in cement costs nationwide, the President of the Actual Property Builders’ Affiliation of Nigeria, Dr Aliyu Wamakko, appealed to the President of the Federal Republic of Nigeria, Bola Tinubu, to urgently convene discussions with cement producers, including that the purpose was to mitigate additional hardships for Nigerians.
Wamakko, talking in Abuja on Wednesday, expressed deep concern over the intensified financial pressure, highlighting that the value hike applied by producers in early January was unfavorable for each Nigerians and actual property builders.
“The value of ready-mix concrete will even be elevated whereas the price of in-situ manufacturing of concrete will rise considerably. Such an increment, if allowed to happen, will worsen the financial scenario of the nation,” he mentioned.
The DEDAN president mentioned common building creates a number of employment alternatives which assist to cut back the poverty index of the nation as such the hike within the worth of cement might include undesirable penalties.
“The resultant results of unemployment are banditry, kidnapping, and armed theft. The federal authorities also needs to do not forget that we’ve got a 28 million housing deficit in Nigeria. Cement is a vital ingredient within the manufacturing of buildings,” Wamakko added.
In an unique interview with Sunday PUNCH, the Government Secretary of the Affiliation of Housing Companies of Nigeria, Toye Eniola, voiced apprehensions concerning the ongoing surge in cement costs, warning that it might spell the tip of inexpensive housing prospects.
He mentioned, “Why is it that it’s the worth of cement that’s going up when about 90 per cent of constructing supplies can be found domestically? However then the argument is that the price of working the enterprise has gone up, and we all know that the financial system is pushed by the fluctuating foreign exchange which is affecting the operation.
“If these working the constructing materials enterprise have to make use of diesel it will be costly as a result of a litre of diesel is about N1,000. Therefore, we can’t blame the producers, however the insurance policies in place.”
He, subsequently, referred to as on stakeholders to look inward and give attention to native constructing supplies.
“Within the olden days, individuals made use of mortal bricks to construct, and we nonetheless have interlocking blocks, amongst others, which make use of 5 per cent of cement. It’s excessive time we started to embrace these applied sciences to construct homes as a result of it’s the solely factor that may instill hope in individuals.”
No justification for worth improve – Minister
In a bid to stem the rising value of cement and different constructing supplies and improve the supply of inexpensive housing in Nigeria, the Minister of Housing and City Improvement, Ahmed Dangiwa, just lately referred to as for a gathering with producers of cement and different constructing supplies within the nation.
He additionally queried the recurring disproportionate improve within the worth of cement specifically, particularly contemplating that cement producers within the nation sourced just about all their uncooked supplies domestically.
Dangiwa mentioned, “It’s disheartening to see how a lot Nigerians need to pay for important constructing commodities like cement, with the costs rising nearly every day. I don’t perceive the explanation for this improve, and it’s not acceptable.
“I’m going to be assembly with these producers quickly in order that they’ll clarify to Nigerians their causes for such incessant hikes. I do know that cement producers supply their uncooked supplies in Nigeria; (these embody) limestone, clay, silica sand, gypsum, iron ore, and the remaining. These minerals abound in Nigeria and these producers get them right here, so there isn’t any justification to try to blame all of it on the rise of the greenback.”
He additional assured that the federal government would create a conducive setting for the non-public sector to thrive, together with by making certain constructing supplies are inexpensive and accessible.
It was earlier reported that cement producers had agreed to promote a 50kg bag of cement at a retail worth of between N7,000 and N8,000, relying on location nationwide, of their assembly with the Federal Authorities.
Nevertheless, builders within the constructed setting rejected the value, asserting that the value negotiation reached was for the wealthy.
In an interview with our correspondent, the Government Secretary of the Affiliation of Housing Company in Nigeria, Toye Eniola, condemned the negotiation.
He mentioned, “What’s honest in N7,000 to N8,000, when BUA promised us a slash from over N5,500 to N3,500 and now they’re negotiating N8,000? The place are we heading for?
“That negotiation is for the wealthy. What they’re saying is with that worth, housing goes to not be for the poor. With that worth, there isn’t any poor man that might be capable of afford it and it will maintain widening the deficit hole.
“The way in which ahead is to return to the fundamentals, that is the time to embrace native constructing supplies. As an illustration, we’ve got interlocking blocks and we require about 5 per cent of cement for this which might save us some huge cash.
“Nigerian Constructing and Street Analysis Institute has performed numerous analysis on various constructing supplies that can be utilized in Nigeria. As an illustration, they’ve researched using bamboo as an alternative choice to the iron rod.”
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