14 August 2012

Nigeria: Heavy Debt, Job Losses Limiting Construction Industry

The anticipated growth in the construction industry needed to drive the nation's economy is being limited by heavy contract debts which has led to incessant job losses in the sector, Linda Eroke writes

The Nigerian construction industry is one sector that has the economic potential of contributing immensely to the nation's Gross Domestic Product (GDP) as experts have predicted over 15 per cent growth for the industry within the next nine years.

However, inadequate funding and heavy contract debts are the major challenges limiting the anticipated growth in the industry. Currently, the industry is on the verge of imminent collapse as a result of the heavy debt contracts by all tiers of government for most well meaning projects which had already been awarded and executed.

Consequently, the failure of government and some multi-national companies across the country to meet their financial obligations of funding capital projects has led to over 100,000 job losses in the past one year.

Last week, the two unions in the nation's construction industry- National Union of Civil Engineering Construction, Furniture and Wood Workers (NUCECFWW) and Construction and Civil Engineering Senior Staff Association (CCESSA) raised the alarm over increasing jobs losses and called for an urgent action in order to save the industry from imminent collapse.

President of CCESA, Dr. Augustine Etafo, observed that no fewer than 100,000 workers had been sacked by both multi-national corporations and indigenous contractors over government refusal to pay for completed and certified projects.

He claimed that not less than N100 billion debt was being owed contractors by all tiers of government noting that government failure to meet its financial obligations to contractors has led to subsequent closure of sites where workers were hitherto deployed.

The union president, who lamented that the rising debt profile had impacted negatively on the operations and activities in the industry, noted the current development had forced contractors to resort to borrowing from commercial banks at high interest rate in order to execute projects.

He explained that most contractors relied on borrowed funds from banks to execute projects, stressing that often times government failed to reimburse the contractors long after such projects have been completed.

According to him, government refusal to settle financial obligations on contracts has made some contractors to cut corners thereby leading to project failure.

"Governments at various levels have not been honouring the agreements on contracts by refusing to pay for contracts that have already been executed and certified complete. As we speak now, contractors are owed over N100 billion. Consequently capital projects are disrupted and contractors have moved out of site for lack of funds. Government have also reneged on payment for cash backing projects.

"This is democracy and if the political leaders are sincere to deliver to the people who voted them into power the dividends of democracy then they must be ready to settle all financial obligations on capital projects that have been executed and certified complete. These projects border on infrastructures which form the bedrock of development of any nation," he said.

Also, General Secretary of National Union of Civil Engineering, Construction, Furniture and Wood Workers (NUCECFWW), Babatunde Liadi, blamed rising debt profile in the industry on failure of the Ministries Departments and Agencies (MDAs) to release funds for contacts that have already been executed adding that "the contractions are afraid to take them to court for fear of losing future contracts".

Liadi listed some of the road projects that have been abandoned because of the unpaid debts to include Oshodi/Apapa expressway, Abeokuta, Lagos road, Lagos/Ibadan express road, Kano/Maiduguri road, Abuja/Lokoja road, East west road and Kaduna eastern bypass.

He also cited the case of lack of continuity of projects by successive government which had no intention to complete the projects embarked upon by their predecessors.

"There are situations in which contracts have been awarded and executed but when a new government comes in, they claim to be unaware of the transaction. This has also contributed to the huge debt profile in the industry," he said.

According to him, the implication is the attendant job losses in the industry noting that not less than 100,000 workers have been severed of their jobs without any benefit.

"We have cases like that everywhere. Lokoja-Abuja road has been on since Obasanjo regime. Every year, they budget for it without money being released. The road today, is in a sorry state; the contractor has abandoned the project and disengaged all the workers.

"In the first week of this month, Dantata Construction Company laid off almost all its workers working at the Kano/Maiduguri road. Another construction company on the same road, laid off almost 80 per cent of its workers because of unpaid debt.

"The Chinese company, CGC; which is also on the same road, did the same thing. So, we have serious problem in the industry and the industry is under grave threat. We need to draw the attention of the government at all levels to the crisis. We call on well meaning Nigerians who can prevail on the government to pay the contractors and save the industry from imminent collapse."

"The worst part of it is that most of these companies borrowed money from the banks with high interest rate and they are spending millions to serve the loan monthly. Workers have been on the receiving end and they are being laid off massively," he explained.

He hinted that the union would mobilise members for a mass rally in Abuja to draw government's attention to the plight of workers. This, he said will be followed by a nationwide strike.

"We have planned our industrial activities or actions in segments. We will hold a peaceful protest rally in Abuja, the Federal Capital Territory, where all the construction sites would shut down on that day. Thereafter, the two labour centres will take up the issue and it could lead to a national strike where other industrial unions will join us on sympathy strike, "he added.

Expatriate Quota Abuse

Another major challenge confronting indigenous construction firm in the country has been identified as internal regulation and expatriate quota abuse. It has been observed that most well meaning projects is being designed by the expatriates and these projects are equally awarded to them to execute.

For instance, the Ikoyi Link Bridge was given to a German company to design and execute by the Lagos State Government. To this end, stakeholders in the labour industry have questioned the refusal of government to award contracts to Nigerian Designers and other allied professionals.

The attention of government has also been drawn to the abuse of expatriate quota by various agencies of government saddled with the responsibility of regulating the influx of expatriate in the industry.

NUCECFWW's General Secretary said the union had done a lot in the past to draw the attention of government to the issue of expatriate quota abuse in the industry to no avail noting that the issue of local content has been a challenge to the industry.

"We have even contemplated a private bill to the National Assembly on this issue. It is disheartening to see that carpenters, painters and even laborers and brought into the country in the name of experts or expatriates."

"The problem is not in our hands but government and its agencies especially immigration and our embassies that give visas to foreigners to come into our country without checking whether they are qualified and actually needed for the or not. They do not play their roles effectively because of gratification and inducement. They just collect money and sign papers to allow them into the country. So, we are helpless," he explained.

Meanwhile, industry watchers have contended that expatriates should only be allowed on specialised jobs whereby Nigerians cannot effectively deliver. They are of the opinion that where the work is assigned to the expatriates, Nigeria should be represented by her own expert or technologist.

They further urged government to ensure total compliance of the laws enacted for the practice of the construction work and regulate the influx of the expatriates into the construction industry.


The union leader further bemoaned the spate of deforestation in the country, which he said has continued to threaten the ecosystem.

He recommended that all tiers of government should embark on programmes that would encourage the planting of tress in their domain.

He also charged government to collaborate with relevant agencies and Non-Governmental Organisations (NGOs) to step up enlightenment campaigns on the effects of deforestation.

"One of the core issues of climate change being discussed all over the world is deforestation. We should be on the same page with the world by managing our climate in order not to suffer the effects of global farming," he added.

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