Building materials account for 70 per cent total cost of building a house —Dangiwa

AVERAGE, building materials account for approximately 50 percent to 70 percent of the total cost of building a house, the Minister of Housing and Urban Development, Arc. Ahmed Dangiwa, has said.

The minister reeled out the statistics in a keynote address during the stakeholder forum on development of fiscal incentives for manufacturers of local building materials components in Nigeria.

Underscoring the importance of building materials in the overall cost of constructing a house, the minister said that cement alone can account for 15 percent to 20 percent of the total cost, while steel and reinforcement materials make up another 10 percent to 15 percent.

He said: “Roofing materials account for five percent to 10 percent, doors, windows, and finishes can take up 10 percent to 15 percent and electrical and plumbing materials round off with five percent to 10 percent.

“Sand, gravel, and aggregates contribute five percent to 10 percent, and blocks and bricks add another five percent to 10 percent.”

These figures, Dangiwa said highlighted a clear reality, pointing out that the cost of building materials has remained a major determinant of housing affordability.

Speaking to the stakeholders, comprising built environment professionals, building materials manufacturers, policymakers, legislators and developers, the minister said: “If we can reduce the cost of these materials through local production and strategic fiscal incentives, we can significantly lower the overall cost of housing construction. This, in turn, will make housing more accessible to the average Nigerian.”

He pointed out that the issue of boosting local manufacturing of building materials had been a longstanding one, noting that the Building Materials Producers Association of Nigeria (BUMPAN) was formally established on 24th March 2004, with the objective of identifying, mobilizing, and sensitizing small and medium domestic producers of building materials and components to the challenges and economic potential.

He said: “BUMPAN was envisioned to lay a solid foundation for the development of robust, effective, and economically viable small and medium-scale industries for the production of building materials.

“It was also expected to facilitate the production of affordable, target-priced houses that would be within the reach of contributors to the National Housing Fund. “

“Similarly, BUMPAN was designed to provide backward and forward linkages in housing production, encompassing building materials and the associated small and medium-scale industries. These industries were to offer employment opportunities, create wealth, and contribute to the economic progress of the country.

“Today, for so many reasons, we cannot really point to what BUMPAN has achieved,” the minister said.

Dangiwa noted that the local manufacturing of building materials has the potential to create thousands of jobs, stimulate economic growth, and reduce reliance on imported materials.

By supporting local manufacturers, he said it would be possible for Nigeria to  foster innovation, improve quality, and reduce costs, making housing more affordable for Nigerians.

According to him, local production of building materials would directly contribute to reducing the cost of construction, thereby making housing more accessible to the average Nigerian.

This he said aligned with the Federal Government’s commitment to providing affordable housing for all.

Dangiwa told the audience that the government is actively working to establish building materials manufacturing hubs across the country.

These hubs, he said would serve as centralized locations where manufacturers can access shared infrastructure, reduce production costs, and benefit from economies of scale.

“The rationale behind this initiative is clear: by clustering manufacturers in designated hubs, we can create a synergistic environment that fosters collaboration, innovation, and efficiency.

“These hubs are to also provide access to modern technology, training programs, and research and development facilities, enabling manufacturers to produce high-quality materials that meet international standards.

“Moreover, the hubs will be strategically located to ensure easy access to raw materials and distribution networks, further reducing transportation costs and enhancing competitiveness,” the minister said.

“In this regard, the suggestions yesterday that these hubs should be established in existing free trade zone areas is worthy of serious consideration. Free trade zones already offer significant advantages, such as tax incentives, reduced regulatory burdens, and access to markets.,” he added

By leveraging these zones, the . minister said that it would be possible to accelerate the establishment of manufacturing hubs, reduce initial setup costs, and attract both local and foreign investments.

“Additionally, empowering producers of key materials like cement to scale up their operations at their existing locations is another viable option,” he said

By providing targeted support to these producers, such as access to affordable financing, tax incentives, and infrastructure improvements, Dangiwa said this would enable them to increase production capacity, lower costs, and meet the growing demand for building materials without the need for entirely new hubs.

He said, This approach not only reduces the cost and time required to deploy new hubs but also maximizes the use of existing resources and infrastructure.

“We are taking this route because we recognize that local manufacturers of building materials face several challenges, including high production costs due to inadequate infrastructure, limited access to affordable financing, competition from imported materials, and inconsistent government policies and regulations.

“These challenges have hindered the growth of the sector and limited its contribution to the economy. That is why we are taking proactive steps to create an enabling environment for local manufacturers.”

According to the minister, fiscal incentives are one of the most effective tools at government’s disposal, adding that the incentives could include tax holidays or reduced tax rates for local manufacturers, customs duty waivers on the importation of machinery and raw materials, grants and subsidies to scale up production, access to affordable financing through low-interest loans, and public-private partnerships to drive innovation and growth.

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