Increasing investment in housing, construction sector to grow economy

The construction industry, consisting mainly of residential and commercial buildings, estates and physical infrastructure, plays a dynamic role in the economies, contributing about 5 percent to annual GDP growth in industrialised countries.

Its impact on growth and structural economic diversification is considerably beyond its nominal contribution to the GDP. Physical infrastructure such as roads, railways and ports drive economic productivity, investment and employment creation.

Residential building apart from their function as income earning assets, which can also be used to raise loans for productive investment, have a positive impact on labour mobility and productivity. The construction industry in developed countries is the highest employer of labour, creating a host of indirect employment and demand in diverse sectors such as transportation, equipment and materials manufacturing, retail trade, interior design, carpentry, etc.

In the United Kingdom, the construction sector contributes as much as 17 percent to growth, if construction investment plus consumption spending on housing services is considered. The potential for the construction industry to contribute to economic growth and employment creation is much greater in developing economies such as Nigeria where there is immense unmet demand for infrastructure such as roads and housing.

The policy frameworks, efficiency, level of funding, organisational efficiency and capacities of the construction sector overwhelmingly constitute a major determinant of the economy’s capability to generate growth and quality livelihoods to millions of citizens.

Amid the global economic slowdown, housing and infrastructure construction policies have been the major tools that developed as well as emerging economies are deploying to catalyse growth.

On March 20 this year, the British Chancellor of Exchequer announced a budget in which policies to boost residential housing construction were the ‘flagship initiative’ expected to lift the economy.

This included government guarantee of mortgages worth 130 billion pounds. In Singapore, where revenues and jobs have been hit by the decline in exports of electronic components to Western markets, housing in 2012 accounted for a massive 30 percent of GDP growth.

Nigeria is estimated to have a 17 million housing units deficit and over N30 trillion investment is required to close its infrastructure gap. The country doesn’t have such a huge housing and infrastructure deficit because it is poor; rather it is poor because it has failed to develop the policies and institutions appropriate for boosting investment and the supply of housing and infrastructure.

The Nigeria Institute of Quantity Surveyors (NIQS) as a critical stakeholder in the construction and infrastructure sector is interested in the extent to which the government’s fiscal measures and economic policy strategy as expressed in the 2013 budget generate housing and infrastructure construction investment and jobs.

We restate our commitment to using our skills in cost economics and project management to partner with the government and allied construction industry professionals in the transparent, timely and cost-effective delivery of infrastructure projects.