For years, the building and construction industry in Nigeria has not had it smooth, experiencing lack of local essential building materials like concrete, cement, steel, insulation materials, e.t.c, shortage of good economic planning and implementation, rising cost of building materials and other supply chain issues.
From the aforementioned above, the lack of timed economic planning, in reference to the scarcity of funds caused by the new redesigned naira note, a policy implemented by the President of the country, Muhammadu Buhari, whose tenure is set to elapse in the next three months, is having a huge toll on the lives of Nigerians. Time would tell if this policy is going to be a plus to his administration when it comes to an end.
However, there are indications that in the end, it could be for the benefit of the country in the future, especially, going by the reassurances of Godwin Emefiele, the Governor of Nigeria’s Central Bank, urging Nigerians to endure the current hardship caused by this policy.
Now, what has been the effect(s) of the scarcity of the new, slowly introduced naira notes on the building and construction industry?
For sure, the first thought that easily comes to mind is availability (which is primary) and price of building materials. When there are no funds to carry out transactions, it creates a stale business environment and prices of the few available commodities/matreials in the market increases and sellers may be tempted to hoard some of these materials, with the optimism that prices will surge, thereby, increasing their profits.
A significant part of building materials used are produced domestically
Supply chain (transportation) is another area that will be hit by the scarcity of the new naira notes and the incoming ban on the old notes (barring court interrupting the process). Extraction of resources and transportation of building materials may come to a halt and at the same time, there will be increase in demand, which as pointed out earlier leads to price increase.
Many are already beginning to reject the old naira notes and with the snail pace injection of the new notes into the market, transporting materials across places, states can become extremely difficult, creating supply chain issues or compounding existing backlogs and shortages that are still affecting domestic supply chains. Do not underestimate the knowledge that a significant part of building materials used are produced domestically.
Rising fuel costs and its scarcity was already a difficult situation before the introduction of the new naira notes and ban on the old notes. This could be one of the reasons majority are questioning the timing of the new naira notes policy.
These problems are already creating delay in getting building materials across to where they are needed and clearly, it also adds to cost overruns, particularly on projects with huge price tags. Even on smaller projects too, it has its consequences.
Finding a solution to this situation could be the withdrawal of the impending ban of the new notes or increasing the injection or introduction of the new redesigned notes to improve the availability of funds for economic purpose.
