Contractors blame inadequate funding, delayed payments and rising construction costs for declining operations across Nigeria.
The Federation of Construction Industry (FOCI) has warned that Nigeria’s construction sector is facing a severe crisis due to inadequate funding, delayed payments and rising operational costs.
The federation raised the alarm in a statement signed by its President and Chairman of Council, High Chief Vincent Barrah, and Director-General, Fidelis E. Imoisili, in Abuja.
FOCI said construction activities had slowed significantly over the past year, attributing the development to the gap between budgetary allocations and the actual release of funds for infrastructure projects.
“The major challenge confronting the construction industry is inadequate and unpredictable funding,” the federation stated.
Contractors Suspend Projects Over Unpaid Bills
According to FOCI, several infrastructure projects were awarded without sufficient multi-year funding arrangements.
It said the situation had resulted in delayed payments, accumulated certified debts, reduced construction activities and, in some cases, project suspensions.
“Most of our members handling various projects are not working, and those working are operating at a very low capacity due to non-payment of certified jobs,” the federation said.
FOCI also criticised the termination of some contracts by the Ministry of Works, arguing that contractors should not be blamed for delays caused by inadequate funding.
The federation maintained that capital-intensive infrastructure projects require consistent funding to achieve timely completion.
Funding Crisis Causes Job Losses
FOCI said the crisis had contributed to significant employment losses across the country, with approximately 41,800 workers reportedly losing their jobs during the period under review.
The affected workers reportedly comprised 1,000 senior staff and 40,800 junior staff.
The federation warned that the impact extended beyond workers to their families, businesses and the wider economy.
Rising Costs Put Pressure on Contractors
The construction industry body said inflation, naira depreciation and foreign exchange fluctuations had increased the prices of cement, steel, bitumen, diesel, equipment and spare parts.
It argued that contracts awarded several years ago could become commercially difficult to execute at their original rates.
FOCI called for contract pricing and variation mechanisms to reflect prevailing economic conditions and the unique requirements of individual projects.
It also identified delayed certification and payment as major threats to contractors’ cash flow, noting that lengthy approval processes often forced companies to finance government projects while awaiting reimbursement.
The federation said lending rates ranging from approximately 20 per cent to 46 per cent had further increased financing pressure, particularly for indigenous contractors.
FOCI Seeks Urgent Government Intervention
FOCI called for collaboration among the Bureau of Public Procurement, the Council for the Regulation of Engineering in Nigeria, the Nigerian Society of Engineers, the Federal Ministry of Works and the Federal Ministry of Justice.
It urged stakeholders to review standard contractual conditions, improve payment discipline and ensure greater funding certainty for infrastructure projects.
The federation acknowledged Nigeria’s infrastructure deficit as a major opportunity for the construction industry but warned that increased budgetary allocations alone would not guarantee completed projects.
FOCI therefore appealed for urgent intervention to prevent further deterioration and what it described as the possible total collapse of the construction industry.
