Investment in infrastructure key to economic prosperity –Osinbajo




With Nigeria needing over $30 billion in the next 10 years to bridge its infrastructure gap, it has become imperative to address the yearning infrastructure deficiency that is presently hindering economic growth through increased spending. BENJAMIN UMUTEME writes  

There was a time in Nigeria when the construction sector experienced a boom, especially in Lagos, Abuja and other commercial cities.

Activities were at their peak as the housing sector operators smiled to the bank. The boom later turned to burst with the biggest spender (government) in the economy unable to maintain the tempo of spending on infrastructure.

What was seen as a temporary lull in government’s ability to invest in infrastructure was to turn into a major challenge for the country. The result was total collapse of infrastructure in the country leading to massive infrastructure challenge that has over the years slowed down the nation’s economic growth.

 

Do the numbers speak well?

A look at the third quarter Gross Domestic Product (GDP) report by the National Bureau of Statistics (NBS) report released yesterday revealed that the construction sector grew by 16.69 per cent in nominal terms (year on year) in the third quarter of 2017, an increase of 13.88 per cent compared to the rate of 2.81 per cent recorded in the same quarter of 2016.

There was however a decline of -0.88 per cent when compared to the rate recorded in the preceding quarter. Nominal growth quarter on quarter was -21.24 per cent.

The sector contributed 3.12 per cent to nominal GDP in the third quarter of 2017 higher than the rate of 2.97 per cent it contributed a year earlier but lower than 4.32 per cent contributed in the second Quarter of 2

“The real growth rate of the construction sector in the third quarter of 2017 is recorded at -0.46% (year on year), higher by 5.67% points from the rate recorded a year previous. Relative to the preceding quarter, there was a decrease of -0.59% points. Quarter on quarter, the sector grew by -22.07% in real terms. Its contribution to total real GDP is 3.04% in third quarter, 2017; lower than its contribution of 3.10% in the previous year and in the previous quarter where it contributed 4.25%,” the report noted.

For the Real Estate Services, growth was rather subdued in the third quarter of 2017 by 1.59%, lower by -0.97 per cent than the growth rate reported for the same period in 2016 and lower by -4.58 per cent compared to the preceding quarter. Quarter-on-Quarter, the sector growth rate was 2.76 per cent.

The contribution to nominal GDP in the third quarter of 2017 was 7.52 per cent lower than the 8.21 per cent reported in corresponding quarter of 2016 and lower than the 7.97 per cent reported in the preceding quarter. Real GDP growth recorded in the sector in 2017 third quarter stood at -4.12 per cent higher from growth recorded in 2016 third quarter by 3.25 per cent and lower by -0.59 per cent relative to second quarter 2017. Quarter-on-quarter the sector grew by 2.59 per cent in the third quarter of 2017. The sector contributed 6.79 per cent to real GDP in third quarter, 2017, lower than the 7.18 per cent  it recorded in the corresponding quarter of 2016 and lower than the 7.21 per cent in the preceding quarter.

 

Challenge is surmountable

Speaking at the 27th Biennial Conference and General Meeting of the Nigerian Institute of Quantity Surveyors in Abuja, Vice President, Prof. YemiOsinbajo, assured that due to the situation the country now finds itself, the Administration of President MuhammaduBuhari decided to that the most effective strategies of dragging the nation’s economy out of recession is to massive spend and invest in the construction industry.

Minister of Finance, Mrs.KemiAdeosun, while explaining the reason for government continuous borrowing at a for a said that the present government is focused on driving the economy through massive investment in infrastructure.

Prof. Osinbajo noted that the present government understands very clearly the critical role the construction sector plays in a nation’s industrial and economic development.

He added that ‘’apart from providing houses for the citizens and roads to facilitate societal integration and movement of goods, the construction sector creates formation and wealth in the economy.’’

According to him, the multiplier effect and employment generated by the on-going construction of National Housing Programme, covering all the 36 states of the federation and FCT is as a result of massive spending on construction by government.

The Vice President, who noted that government cannot do it alone said it would continue to sustain the collaborative efforts with key stakeholders like the professionals, contractors and manufacturers to bring about the much desired transformation in the industry.

He commended the President and members of the Institute for demonstrating responsibilities to contemporary issues relating to government for the growth and development of Nigeria,

Earlier in her opening remarks at the event, the NIQS President, Mercy Iyortyer stated that the choice of this year’s theme is part of the Institute’s ongoing efforts in contributing to the change mantra of the present administration in the area of sustainable economic growth and national development.

QS Iyortyer on behalf of the Institute commended the government of the day for taking the bull by the horn in getting the country out of recession thereby reducing dependency on oil revenues and diversifying the economy by harnessing other industries such as agriculture, manufacturing and solid mineral as well as tackling other macroeconomic factors.

The NIQS president urged the government to consider reformations in the sector by constituting a Construction Industry Board or Council comprising key players in the Industry who will advise, plan and execute reforms that will galvanize the Industry into the needed stimulant for sustainable economic development and growth.

 

Assuring words

According to the NBS, the construction sector grew by 16.69 per cent in nominal terms in the third quarter of 2017, representing an increase of 13.88 per cent compared to the rate of 2.81 per cent recorded in the same quarter of 2016.

Also, the Real Estate sector witnessing growth even though rather subdued in the third quarter of 2017 by 1.59 per cent, lower by -0.97 per cent than the growth rate reported for the same period in 2016 and lower by -4.58 per cent compared to the preceding quarter.

Experts are of the opinion that increased investment by the present administration since 2016 has began to bear fruit, but whether the fruits are long term is a different ball game.

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