The construction and real estate sector contributed N8.33tn to the real Gross Domestic Product (GDP) in Q1 2023, according to the latest data released by the Nigeria Bureau of Statistics. This indicates a reduction of 7.4% compared to the N9tn generated in the fourth quarter of 2022.
The decrease is attributed to the adverse effects of cash crunch experienced during the quarter due to the naira redesign policy of the Central Bank of Nigeria. Consequently, the GDP growth of the country has fallen below global projections of the International Monetary Fund, the World Bank, and the African Development Bank.
A recent report from KPMG also projected that Nigeria’s GDP will only grow at a slow pace of 3% in 2023 due to the challenges associated with naira redesign and political transition.
A breakdown analysis provided by the NBS shows that the real growth rate of the construction sector declined by 1.56% points from the previous year. However, the sector contributed 11.79% to nominal GDP in Q1 2023, higher than the 9.68% contribution in the previous year and 10.16% contribution to Q4 2022.
For the real estate sector, the statistics agency recorded a relative decline of 4.46% compared to 5.62% contribution in Q4 2022. The contribution to nominal GDP in Q1 2023 stood at 4.46%, compared to 4.92% recorded in Q1 2022 and 5.62% in Q4 2022.
Experts in the housing sector had predicted the decline in the sector’s GDP contribution before the NBS report was released. They noted that the high cost of building materials, the inability to pay artisans, and the increased cost of production were responsible for the halt in revenue contribution to the GDP, which led to an increase in housing deficits.
The cash crunch caused by the naira redesign policy of the CBN has also led to job loss in the construction sector. One site engineer at a residential development in Jabi lamented that labourers were now jobless, and production had reduced drastically due to the naira scarcity affecting their productivity.
In conclusion, the decline in the construction and real estate sector’s GDP contribution has highlighted the urgent need for government intervention. The sector is crucial to the economic growth of the country, and efforts must be made to address the challenges hindering its growth.
