The loans obtained from banks by operators in the nation’s construction sector rose from N1.025tn in January 2022 to N1.157tn in October 2022.
This is according to the Central Bank of Nigeria Sectoral Analysis of Deposit Money Banks’ Credit.
Data from CBN also showed that the firms borrowed the sum of N132bn between January 2022 and October 2022.
This is coming days after a report by the National Bureau of Statistics revealed that construction services contributed N12.9tn to the Gross Domestic Product in the first three quarters of 2022.
In January this year, the Governor of the CBN, Godwin Emefiele, had said that the banking sector would increase access to finance and credit for households and businesses in 2022.
“The policy focus of the bank for 2022 is with a pledge to sustain improved access to finance and credit for households and businesses, mobilise investment to boost domestic productivity, enable faster growth of non-oil exports, and support employment generating activities,” he said.
However, stakeholders have maintained that the current double-digit lending rate is unfavourable as it directly impacts the cost of production and the competitiveness of the sector.
Reacting, the Public Relations Officer, Nigerian Institute of Builders, Lagos Chapter, George Chukwurah, stated that the quest to defeat idleness had made more companies run to banks for more loans despite the economic downturn witnessed in the country.
He said, “Business is risk-taking so I believe many business owners don’t want to stay idle, which is why they are still borrowing. This (borrowing) doesn’t mean the sector is doing well. I can tell you things are tight in this sector.”
Nigeria’s housing shortage is estimated at 28 million units. The country’s growing population has increased the need for housing, but affordable housing is still a major problem. Firms are ramping up construction works to meet the rising demand, but cost of construction is translating into high cost of rent and buildings.
Housing and infrastructure are capital-intensive, with the country’s capital stock still at 35 per cent, according to the Federal Government.
Nigeria needs at least $1.5trillion in the next 10 years to close its infrastructure deficit and achieve an appreciable level of the infrastructure stock, said the Federal Government.