RESEARCH

BRIEFThe Nigerian Construction Industry OUTLOOK

BUSINESSDAY

A Report by BusinessDay Research & Intelligence Unit (BRIU)

Content

Executive Summary 4........................................

Industry Synopsis 5...........................................

Survey Insights & Analysis............................8

Latest News & Developments 12......................

Case Studies...................................................14

Conclusion & Recommendations..................17

Appendices.....................................................24

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Executive Summary

BusinessDay Research & Intelligence Unit (BRIU) is delighted to present the results of our Construction Survey which reects the views of 114 professionals from segments of the Construction Industry, as well as Finance and the Public Sector. Our report provides in-depth analysis of the construction industry including trends and challenges being experienced on the ground.

Sentiment for the construction industry is somewhat optimistic and the outlook for 2018 is relatively positive, with further increases in activity expected across a few strategic sectors. However, there are a number of challenges currently facing the industry, and of these, the country's currency value and access to nance/funding for activities is causing the greatest concern.

With the exception of Real Estate Development Sector, which is shared equally between private and public sector nancing, other signicant aspects of the Construction Industry is still largely inuenced by public sector nancing (Federal and State government) for infrastructural developmental activities.

In the 2016 Federal Government Budget, a total of N422.9 billion was budgeted, comprising N260.082 billion for Works, N91.257 billion for Power and N71.559 billion for housing. According to the Federal Minister of Power, Works & Housing, during the implementation of the 2016 budget, 103 construction companies executing 192 projects were paid who employed 17,749 people directly and 52,000 people indirectly in works, adding that there was provision of funding under the 2017 budget in the sum of N90 billion out of which N47.169 billion has been paid to 62 contractors working on 149 projects to continue work on roads and bridges and keep people at work and sustain production.

But, in spite of this commitment to funding infrastructure by the governments, industry stakeholders posit that the government cannot do it alone because of the huge capital requirement, hence the need for private public partnership (PPP) initiatives. According to the Managing Director of the Infrastructure Bank, contractors working for the federal and state governments are owed about N1.7 trillion and some of these debts are as old as 5 to 10 years.

Analysis of data from the National Bureau of Statistics (NBS) for 2016 reected that Nigeria's construction to GDP was 4 percent. The recommendation of the Asian Development Bank is that in order for a developing country to sustain growth and development, not less than 6 percent of GDP should be invested on infrastructure.

Nigeria's infrastructure stock currently accounts for about 20 to 25 percent of GDP, which is signicantly lower than the global average of 70 percent. Hence, the need for accelerated and increased Private Sector involvement and investment in the Sector, as the country requires at least $100 billion annually for the next 30 years to meet our infrastructure needs, as forecasted by the NIIMP.

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INDUSTRY SYNOPSIS

Section 1

Industry Synopsis

Nigeria's Construction Industry grew by 8 percent from the previous quarter, according to the latest Q2 GDP gures released by the National Bureau of Statistics (NBS). The Sector's GDP has been improving steadily in the last four quarters (Q3 2016 to Q2 2017). From a drop in GDP of 21 percent in Q3 2016 from the prior quarter, the sector bounced back in Q4 2016 recording growth in nominal GDP of 19 percent over the previous period and increase of 15 percent in Q1 2017.

Subsequently, Construction GDP in Q 2 2 0 1 7 o f N 1 . 1 7 t r i l l i o n represented nominal growth of 8 percent from Q1 2017. In real terms, growth was 5 percent (quarter on quarter).

Comparative analysis of Q2 2017 to the same quarter in 2016 revealed that the Sector grew by 18 percent in nominal terms (year on year). The Industry accounted for 4 percent of Country's total GDP of N27.22 trillion Naira in Q2 2017.

The Nigerian Construction Sector is p r i n c i p a l l y i n v o l v e d i n t h e development and maintenance of civil engineering works and infrastructural provision comprising roads, bridges, railways, etc., as well as residential and commercial real estate.

Opportunities for investment and expansion abound in the Industry for infrastructural and real estate development activities if the right policy, regulations and framework are adopted and instituted. With respect to housing development, back in 2006, the United Nations agency for Human Settlement, UN-HABITAT, estimated the country's housing decit at 17 million units. That was 11 years ago, meaning that the decit could be more. The market value of this decit has been estimated at $363 billion.

The UN report states that for the country to bridge this gap, it needs to bu i ld be tween 172 ,000 and 200,000 housing units annually for the next 20 years. But a recent report on the real estate market reveals that

despite efforts at various levels of development, not more than 50,000 units are built every year.

In the area of inf ras t r uc ture development, a 30-year roadmap infrastructure development plan, known as the Integrated Infrastructure Master Plan (NIIMP) projects that Nigeria required at least $3.05 trillion for infrastructure development over the next three decades. The NIIMP captures the Energy, Transport, I n f o r m a t i o n C o m m u n i c a t i o n Technology (ICT), Agriculture, Water, Mining, Housing, Social Infrastructure, Security and Vital Registration sectors in Nigeria.

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In its 2017 Budget, the Federal Government made provision of N246.74 billion for the Construction and provision of xed assets. A l l o c a t i o n t o t h e construction/provision of roads a c c o u n t o f N 1 0 7 . 3 9 b i l l i o n represented the bulk of total capex followed by construction/provision of electricity with N89.23 billion. The total 2017 capital budget of the Federal Ministry of Works, Housing and Power accounted for 55 percent of its total budgetary allocation and 29 .3% o f t he t o ta l F ede ra l Government budget.

The Ministry's budgetary allocation for the rehabilitation/repairs of infrastructure amounted to N91.69 billion, of which 82 percent is t a r g e t e d t o wa r d t h e r o a d rehabilitation and repairs.

Compared to many of its African peers, Niger ia has re lat ively advanced infrastructure networks that cover extensive areas of the nation's territory. Transport infrastructure is inadequate though and has been described as one of the leading impediments to the country's growth. It is estimated that raising the country's infrastructure level to that of the

region's middle-income countries could boost annual real GDP growth by around four percentage points. Infrastructure spend drives the real economy, stimulates production and industrial activity, which in turn, leads to employment generation and enhanced household spending.

The Government cannot do it alone because of the huge capi ta l requirement. According to the President, Commonwealth Association of Surveying and Land Economy, cost of construction in Nigeria ranks among the highest in the world on account of high interest rates, inaccessibility to cheap affordable funds, lack of skilled manpower, signicant dependence on imported construction materials; and also of great concern is the endemic corruption in the industry.

There is therefore need to explore private participation in infrastructure development in Nigeria. Globally, contractual models and case studies abound on successful Public-Private Partnerships (PPPs) in construction. It is critically important to explore opportunities with regard to best practices, learn lessons from case studies, and provide guidance on

pr ivate sector involvement in infrastructure nancing, provision and management relevant to African countries.

According to the Sub-Saharan Africa Transport Policy Program (SSATP), there is renewed interest in public-private partnerships (PPP) for infrastructure and service delivery in deve l op i ng c o u n t r i e s . T he se partnerships enable the public sector to harness the exper t i se and efciencies that the private sector can b r i n g t o t h e d e l i v e r y a n d management of infrastructure and r e l a t ed s e r v i c e s . Ove r 100 d e v e l o p i n g c o u n t r i e s h a v e implemented a PPP in infrastructure since 2005 of which 50 in transport. The average total annual private investment in transport projects in Africa during the 2007-2011 period was $750 million, with an average of three projects per year reaching nancial closure. In 2012, 83 new transport projects reached nancial closure in 12 developing countries.

BREAKDOWN OF CAPITAL BUDGET EXPENDITURE BY SEGMENTSNigeria infrastructure spend (2008-2016)

Source: Budget Office of the Federation, Media

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SURVEY INSIGHTS

Section2

Survey Insights

42 percent of Industry players surveyed are of the view that industry activities will increase signicantly over the next 12 months. 39 percent have adopted a more moderate view and believe that construction industry projects will increase somewhat. Some industry professionals are of the opinion that the industry will not experience any increase (10 percent) while another 10 percent of industry players, on the other hand, opined that construction activities will somewhat decline.

A. INDUSTRY OUTLOOK

1. Outlook for the Construction Industry over the next 12 months

2. Projection on Construction Activities in 2018 compared to the Current Year

Respondents expect the most growth over the next year to occur in Aggregates Production & Mining (84 percent); Highways, Bridges & Roads (78 percent); Concrete & Asphalt (78 percent) and Utility Contracting (70 percent).

The abovementioned segments are the top four expected to increase in output and activities. Others are Industrial Construction (68 percent) and Telecommunications (60 percent). On the other hand, industry insiders posited that the Non-residential; Residential; Oil & gas and Telecommunications markets will experience minimal or negligible growth over the same time frame in terms of construction/engineering projects and activities.

3. Most Attractive Segments of the Construction Industry in the next 2 years

According to 27 percent of Construction professionals surveyed, Highways, Bridges & Road projects will be the most attractive market in the next 2 years, while 15 percent of survey respondents are of the perspective that the Railroad Construction market will be the most attractive in the near-term. Concrete & Asphalt and the Utility Contracting markets were posited by 10 percent of Industry operators equally to be the most viable markets respectively in the same time-frame.

4. Factors posing the Most Concern to the Construction Industry in the Next 12 Months

The value of Nigeria's currency is of the most concern to the Construction Industry. This is followed by the Economy, Input Costs 0f Raw materials and the threat of Competition. Other major areas of concern include the Labour Supply/Skilled Employment; Technological Changes; Cost of Operations, among others.

5. Sale/Rental (or Purchase) of Construction Equipment

66 percent are of the opinion that rental for new equipment will increase; 62 percent posit that the sale (or purchase) of new equipment will also increase. In terms of used equipment, 59 percent and 55 percent of respondents estimate the increase in the rent of used equipment and rise in the sale (or purchase) of used equipment respectively.

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On the back of the Q2 GDP gures reecting the country in economic recovery, business condence is high among players and experts in the Construction Industry with 88 percent of survey respondents optimistic with respect to their expectations of sustained improvements and continued growth regarding industry activities and outlook. The remaining 12 percent are pessimistic reecting lack of condence concerning their business prospects and opportunities.

Subsequently, of the 88 percent optimistic of business prospects, 8 7 p e r c e n t a n t i c i p a t e i n c r e a s e i n b u s i n e s s productivity/protability. In addition, 62 percent forestall growth of their business' assets, while 52 percent further predict expansion of their workforce in 2018.

B. BUSINESS PROSPECTS

1. Expectations on Business prospects for your Organisation in 2018

2. Expectations on Equity for Renancing or New Investment in 2018

With regards to funding, 60 percent of respondents plan to increase their equity for renancing or new investments, while 30 percent of industry professionals expect their capital base to remain the same, 10 percent, on the other hand, anticipate decline in fresh equity injections.

With respect to securing debt for renancing or new investments, 46 percent believe that this will increase, 50 percent anticipate no growth in their respective debt portfolio. The balance of 4 percent expect opportunities for new debt for renancing to decline.

In the area of securing debt for development projects, 64 percent expect an expansion of this category of funding, on the other hand, 28 percent expect minimal increase, while the remaining 8 percent anticipate a reversal in terms of decline in development-related debt.

3. Expectations on Sources of Debt for Business Activities in the Next Year

Further break-down on the sources of debt expected to increase in 2018, 77 percent of professionals are optimistic that debt funding from alternative lending platforms will account for the most nancing for their business activities. This is followed by debt funding from non-bank institutions of 57 percent, while banks and other non-bank lenders and other institutions account for 42 percent and 39 percent respectively.

4. Finding Qualied Workers to ll Open Positions for Work

In terms of recruitment and quality of on-site employees i.e. ofce workforce, 55 percent of respondents revealed that it was not difcult to recruit; 35 percent of those surveyed found it somewhat difcult, while the remaining 10 percent encountered difculty in sourcing for on-site labour locally.

With respect to off-site employees i.e. for technical (engineering or construction) roles, 52 percent had no difculty, 45 percent experienced some level of difculty, while 3 percent encountered difculty.

Sixty-one percent had no difculty in sourcing for sub-contract labour, 32 percent found it somewhat difcult, while 6 percent experienced signicant difculty.

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Respondents for the Survey comprised C-Suite Executives and Industry professionals operating in various areas of the Construction Sector. Breakdown of participants that undertook the survey exercise reected that 21 percent are from Civil Engineering rms; 17 percent represent the Building Materials & Aggregate producers; 15 percent comprise the Construction Companies & Contractors; 13 percent are in Real Estate Development; 10 percent operate in the Banking & Finance Sector.

Re s p o n d e n t s f r o m t h e M o r t ga ge I n d u s t r y a n d Government/Regulators each accounted for 8 percent of the survey participants. The balance of 6 percent and 2 percent were shared equally between the Construction Equipment Manufacturers (6 percent) and Construction Equipment Distributors (2%) respectively.

C. INDUSTRY INFORMATION OF SURVEY PARTICIPANTS

1. Description of Company Activity

2. Sub-Sectors where Respondents do the most work

When asked on the segments of the Industry where the respondents and the Organisations they represented did the most work, 22 percent revealed that Highways, Bridges & Roads construction projects accounted for most of their Company's activities. Residential building projects was responsible for 15 percent of respondents' company engagement.

Railroad construction, Oil & gas projects and Concrete & asphalt each accounted for 9 percent of Industry rms' work respectively, while Industrial Construction work represented 8 percent of respondents' projects. Seven percent of respondents conducted their most work in Site preparation & excavation work, while 6 percent carried out the bulk of Company activities on Non-residential building projects. Utility contracting works was the major work done by 5 percent of survey respondents.

The remaining respondents do their most work on Telecommunications construction projects and in Aggregates production and mining.

3. Net Prot for 2017 compared to the previous year.

Thirty–eight (38) percent of those surveyed expect net prot for 2017 to increase signicantly (15 percent or more); 50 percent of respondents anticipate moderate growth in net prot of 5 percent to less than 15 percent. On the other hand, 13 percent of respondents reveal that their net prot will decrease signicantly by year-end.

4. Firm's Construction-related activity by year-end 2017 compared to 2016

When asked to provide information on aspect of each respondent's respective rm's activities, 74 percent of those surveyed believe that productive infrastructure services will increase for their businesses; 63 percent are of the view that their output product and service prices or fees as well as input costs will increase by year-end 2017.

Private non-residential construction activities are also anticipated to increase somewhat by year-end estimation. Despite this, respondents are will maintain their current employment levels and not recruit any new employees between now and the end of the current year under review.

5. Description of Company's Annual Revenues

Breakdown of Company's annual revenues reect the following – 40 percent generate annual turnover of less than $5 Million; 28 percent generate income of $100 Million or more; 24 percent reveal yearly revenues of $25 Million to less than $100 Million while the remaining 5 percent generate $5 Million to less than $ 25 Million.

6. Total Number of Employees

41 percent have a workforce over 1,000 employees; 31 percent employ 11 to 50 personnel; 14 percent currently engage 201 to 1,000 members of staff; while 10 percent have workforce of 51 to 200 and the remaining 3 percent surveyed have 10 or fewer employees.

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LATEST NEWS & DEVELOPMENTS

Section3

FG eyes private capital to fund $300bn infrastructure gap http://www.businessdayonline.com/fg-eyes-private-capital-fund-300bn-infrastructure-gap/

Private capital seen as solution to infrastructure nancinghttp://www.businessdayonline.com/private-capital-seen-solution-infrastructure-nancing/

AFC says Nigeria needs US$3trn for economic infrastructurehttp://www.businessdayonline.com/afc-says-nigeria-needs-us3trn-economic-infrastructure/

Buhari, Museveni discuss transport infrastructure to link two countrieshttp://www.businessdayonline.com/buhari-museveni-discuss-transport-infrastructure-link-two-countries/

Infrastructure fund will transform African economies, says Adesinahttp://www.businessdayonline.com/infrastructure-fund-will-transform-african-economies-says-adesina/

FG fresh privatisation of key infrastructure assets opens new opportunity for investorshttp://www.businessdayonline.com/fg-fresh-privatisation-key-infrastructure-assets-opens-new-opportunity-investors/

Infrastructure decay, insecurity, hinders Foreign Direct Investment inow to Nigeria, Study revealshttp://www.businessdayonline.com/infrastructure-decay-insecurity-hinders-foreign-direct-investment-inow-nigeria-study-reveals/

Unresolved Infrastructure challenges stiing gas sector growthhttp://www.businessdayonline.com/unresolved-infrastructure-challenges-stiing-gas-sector-growth/

Imperial City: An island urban community with ambitious infrastructure master-planhttp://www.businessdayonline.com/imperial-city-island-urban-community-ambitious-infrastructure-master-plan/

Aligning new investments trend to solve West Africa's power Infrastructure lapseshttp://www.businessdayonline.com/aligning-new-investments-trend-solve-west-africas-power-infrastructure-lapses/

Latest News & Developments

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CASE STUDIES

Section4

Case Studies

The Dakar-Diamniadio Toll Highway in Senegal

The Public-Private Infrastructure Advisory Facility (PPIAF)'s support to the Government of Senegal led to the construction of the Dakar–Diamniadio Toll Road, one of the rst toll roads to be built in Sub-Saharan Africa (excluding South Africa) through a public-private partnership. The highway will provide substantial socioeconomic benets for the 2 million Senegalese living in Dakar and surrounding cities. The highway is essential to Dakar's development as a subregional economic center. It will reduce congestion in Dakar and improve the ease of travel to and from the Dakar metropolitan area, which includes the emerging business center of Diamniadio.

The Dakar–Diamniadio Toll road project exemplies PPIAF's strategy t o en cou rage pub l i c -p r i va te partnerships for developing priority infrastructure projects in Sub-Saharan Africa. The Dakar Diamniadio Toll Highway, inaugurated on August 1, 2013 is the rst section (32 km or 20 miles) of a broader project to connect the capital, Dakar, through a double three-lane highway to a new airport (Aeropor t International Blaise Diagne, AIBD) and a special economic zone, the Dakar Integrated Special Economic Zone (DISEZ) and the rest of the country. The cost of this large project is estimated to be about $696 million (FCFA 380.2 billion, excluding grants).

The rst privately-operated toll highway in the WAEMU region

Senac, the Senegalese subsidiary of Eiffage that specializes in public infrastructure projects, was awarded a 30-year contract to operate the highway in 2009. According to Eiffage's estimates, an average of 26,671 vehicles per day (VPD) used the busiest section of the highway in

2013. This gure is expected to rise to 44,797 VPD by 2036. This brand new highway is also one of the rs t examples of a road infrastructure project in Sub-Saharan Africa to be completed under a Public-Private Partnership (PPP). To date, the highway project has created 930 jobs (800 during the construction phase and 130 during the launch phase). The new highway has also improved urban mobility, opened up access to secur i ty, t ranspor t , administrative, health and education services, and made it easier to access key tourist attractions in the city.The toll highway is just one part of a m uc h b roader i n f ra s t r u c t u re development program in Senegal, which includes an extension to the Port of Dakar, the construction of the new international airport, and several other transport projects. These new infrastructure projects will help to stimulate economic growth in the manufacturing and industry sectors, as

well as boosting tourism, making Senegal more competitive on the world stage.

Boosting regional integration

The toll highway between Dakar and Diamniadio is a vast project, with its inuence stretching far beyond the local area, and even beyond the borders of Senegal. It is just one part of a much broader regional project, as the rst section of the future Trans-African Highway between Dakar and Lagos, a vast 4,010-km (2,490-mile) road passing through the Economic Community of West African States (ECOWAS), i.e. through Mali, Guinea, Guinea-Bissau and Gambia. This future Trans-African Highway is a key element of many of the priorities of the Programme for Infrastructure Development in Africa (PIDA), and will help to boost long-distance trade in the region.

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N4 Toll Road from South Africa to Mozambique

South Africa's PPP environment is strong, with a solid track record in delivering major projects. The 2015 EIU Africa Infrascope ranked South Africa highest within the continent. The country has a stable business infrastructure, a sophist icated nancial sector, and high standards in accounting, regulatory structures and law. South Africa has an important experience in PPP projects, involving about 300 such projects on the national and provincial levels since 1994.

The rehabilitation of the N4 toll road f o r m s p a r t o f t h e M a p u t o Development Corridor (MDC) project, between Johannesburg and Maputo, which also includes other modes of transport. The N4 project is the rst major PPP project implemented, although other PPP road projects followed, such as the N3 between Johannesburg and Durban.

The concession was awarded to the Trans African Concessions (TRAC) consortium. TRAC is responsible for the nancing, design, construction, rehabi l i tat ion , operat ion and maintenance of the tol l road. Financing for the project was split between 20% equity and 80% debt. The governments of South Africa and Mozambique jointly guaranteed the debt of TRAC and to a certain extent the equity. The concession contract was signed with South African National Roads Agency (SANRAL) and the Mozambique Roads Agency (ANE) and ends in 2027, after which the road rever ts back to the governments. For toll pricing purposes, four types of vehicles were considered (light, medium heavy, large heavy and extra heavy). Tolls are collected at six main line toll plazas and at two ramp plazas. However, only two toll plazas are located in Mozambique, implying that the project is by and large supported by toll revenues collected along the South African road stretches and that South African road users subsidise Mozambican users of the

entire toll road.

The concession was initially based on 0.20 Rand per km for a light vehicle and 0.50 Rand/km for heavy vehicles. Nonetheless, a discount system was introduced for commuters and local users. Since then toll rates have increased but the agreement stipulates that toll tariffs can only be increased annually in line with consumer prices. In practice, increases varied between South Africa and Mozambique, due to the exchange rate uctuation between the South African Rand and the Mozambique Metical.

The original agreement stipulated a 30 year concession period beginning in 1997. This period is maintained although in 2004, the contract was a m e n d e d t o i n c l u d e t h e concessionaire's responsibility over the N4 road sect ion between W i t b a n k a n d P r e t o r i a . T h e concessionaire now manages 630km of toll road, the majority of which is in South Africa and only about 50km in Mozambique. The cost of the initial contract was about 3 billion ZAR (South African Rand) - about 660 million USD (in 1996 value over 30 years of which 1.5 billion Rand to be allocated in the rst three and a half years.

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CONCLUSION

Section5

CONCLUSION

With an estimated population of 182 million and GDP of US$405.1 billion in 2016, Nigeria is Africa's most populous country and largest economy, yet still faces infrastructure c hal lenges, having commit ted US$38.96 billion in infrastructure investments since 2000, with 37 active PPP projects under construction or in operation as of December 2015, according to the PPIAF.

The World Economic Forum's Global Competitiveness Report 2016-2017 ranked Nigeria's infrastructure score (2.10 out of 7) 132nd out of 138 countries. Nigeria's PPP readiness shows a mixed performance, as scored by the World Bank Group's Benchmarking PPP Procurement 2017. Though performing better than other Sub-Saharan African countries, Nigeria scored worse than other low-to-middle-income economies in two dimensions of the benchmarking analysis: PPP preparation and contract management.

T h e P P I A F c o m m i s s i o n e d a n independent impact assessment in February 2016 to review past technical assistance; identify and validate legal, institutional, and policy reform outcomes encouraging private participation in infrastructure; and assess impacts of public-private partnership (PPP) projects. According to the results from report, the port s e c t o r s h o w e d m e a s u r a b l e satisfactory results for efciency and income gains. The water and energy sectors, however, fell short at the regulatory level, with success and f a i l u r e t i e d t o s t a ke h o l d e r engagement and a functioning institutional framework having well-identied and coordinated public and private stakeholders.In 2008, the Federal Government of Nigeria established the Infrastructure Concession Regulatory Commission (ICRC) under the Infrastructure Concession Regulatory Commission (establishment, etc.) Act, 2005. The

ICRC was established to regulate Public Private Partnership (PPP) e n d e a vo u r s o f t h e F e d e r a l government aimed at addressing Nigeria's physical infrastructure decit which hampers economic development.

The Commission published all Federal government projects eligible for Public Private Partnership (PPP) contracts for the 2016/17 period. There are over 144 pro jec t s earmarked f rom the Federa l Ministries of Power, Works & Housing; Transportation; Water Resources; Interior; Trade & Investment; Health; Communication Technology, etc. Total estimated costs of the projects are over N2.13 trillion. This publication is meant to notify interested investors to prepare to participate in the process when procurement commences.

This month, the Federal Government launched the ICRC PPP Contracts Disclosure Web Portal to foster transparency and accountability in PPPs in order to attract the much-needed foreign capital and expertise

to scale up Nigeria’s infrastructure t h r o u g h P P P s a n d p r o m o t e sustainable growth and development. Currently, there are 69 projects at various stages of development and p ro c u remen t , w i t h 35 u nde r implementation. These projects cover key sectors such as transport, energy, social & health and telecoms.

Nigeria's annual infrastructure needs are estimated at $3.05 trillion – approximately 7 times Nigeria's GDP – with $66 million of the current bill unfunded. Nigerian governments have h i s t o r i ca l l y nanced a substantial share of the country's infrastructure on balance sheet, with local banks unable to supply the amount and tenor necessary for loans, consequently leaving many projects unfunded.The lack of well-structured PPP projects is the biggest constraint. Nigeria has to have a more extended use of the PPP model to ll the US$67 billion per year infrastructure gap. Although, the Country has continued on the direction of structuring a solid PPP project pipeline to attract investors with the work of the ICRC.

PROJECT PHASE OF INFRASTRUCTURE DEVELOPMENT PLANS

Source: ICRC

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RecommendationsPolitical commitment: The Government of Nigeria must set PPP in planned or sc heduled infrastructure projects as a priority. The rst driver must the President. But commitment alone isn't enough; it needs to be turned into action by government agencies. An intra-agency coordinating committee can be set up in cases of projects that impact several agencies with clearly dened roles and time-lines for deliverables.

Consensus-building and stakeholder engagement: Seminars with stakeholder groups to discuss structuring options for infrastructure projects and socio-economic drivers of the willingness to pay for services via PPPs. The combination of careful outreach to stakeholders, a reasonable pricing of services, signicant time savings and a well-maintained infrastructure means that PPP-related projects in the country will be accepted by the population.

Experienced concessionaire with strong commitment to Nigeria: The concessionaire should have a long history of involvement in, and commitment to, Africa to ensure that the project is constructed and is being operated to a high standard, on time and within budget. Strong involvement of development institutions in both public and private nancing: Involvement of public and private development institutions. Development institutions can provide long term debt-funding and guarantees, as well as act as arrangers and global coordinators bringing together several investors for PPPs.

Clear, visible benets: Being able to provide measurable benets to stakeholders for these projects is key from the investor side to the population impacted.

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Reference

NBS GDP Reports

CBN Statistical Bulletin

WEF Global Competitiveness Report

SAATP PPP Road Construction Document

PPIAF Impact Stories

The Budget Ofce of the Federation Approved Budgets

InfraPPP Global Outlook Reports

World Bank Group PPP in Infrastructure Resource Centre

South Africa PPP Knowledge Lab

PPIAF Toolkit for Public-Private Partnerships in Roads & Highways

National Integrated Infrastructure Master Plan (NIIMP) Nigeria

ICRC Published PPP Projects Pipeline

The Brookings Institution Africa in Focus

AFDB Group Selected Projects

BusinessDay Newspaper Nigeria

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Selected Infrastructure Organisations

Federal Ministry of Power, Works & Housinghttp://www.pwh.gov.ng/

Infrastructure Concession Regulatory Commission (ICRC)http://www.icrc.gov.ng/

Nigeria Sovereign Investment Authority – Nigeria Infrastructure Fundhttp://nsia.com.ng/nigeria-infrastructure-fund/

The Infrastructure Bank Plchttp://www.infrastructurebankplc.com/

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About the Research

For advert placement, sponsorship and other enquiries, please contact the Author of this Report:

Omosomi OmomiaSenior Research AnalystBusinessDay Research & Intelligence Unit (BRIU)omosomi.omomia@businessdayonline.comomosomi.omomia@gmail.comtwi�er.com/BusinessDay_RIUwww.facebook.com/businessdayintelligence

BusinessDay Media LimitedWeb: www.businessdayonline.com

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BusinessDay Nigeria

@businessdayng

This report has been informed and guided by the views, percep�ons and opinions of 114 construc�on professionals. These professionals work at the core of the property and construc�on markets in large corporate firms, construc�on agencies, government bodies and financial ins�tu�ons.

In September 2017, a survey was conducted to determine the outlook for the industry and to drill down into the challenges currently being faced by industry.

BusinessDay would like to thank all those that contributed to this report.

2018COMPANIES TO INSPIRE

For further enquiries , please contact:

Omosomi on 08094821958 | email: omosomi.omomia@businessdayonline.com

Ada on 08034265411 | email: adaobi.agbaza@businessdayonline.com

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BUSINESSDAY INNOVATION

REPORT

APPENDICES

Section6

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Section6

Disclaimer

This publication contains general information only. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your nances or your business.

Before making any decision or taking any action that may affect your nances or your business, you should consult a qualied professional adviser.

BusinessDay Media Limited shall not be responsible for any loss whatsoever sustained by any person who relies on this publication.