Construction regulatory agencies: the need to look beyond revenue generation

In an interview with Nike Popoola, Temitope Runsewe, Managing Director of Dutum Construction Company Limited, discussed the construction regulatory agencies as well as prospects for the industry.

How would you describe the prospects of the construction industry in 2022?

The United States Department of Trade has projected that Nigeria’s construction market will grow by 3.2 percent annually between 2021 and 2025. This is coming on the back of a 7.7 decline in 2020, due to restrictions caused by the Covid-19 pandemic. With the discovery of coronavirus vaccines and the gradual easing up of economic activities, construction projects have returned. And data by the National Bureau of Statistics show that the construction industry grew by 4.10 percent in Q3 2021. This makes 2022 look more promising as experts have projected that Nigeria’s economy will outperform the World Bank’s growth forecast of 2.5 percent in 2022. Despite the discovery of newer strains of COVID-19, I do not see any economic shutdown similar to those experienced in 2020 that would bring activities in the construction industry to a halt. Rather, I project that the introduction of private capital in the sector will create more jobs, opportunities, and revenue sources that would benefit the Nigerian economy overall. It is a known fact that growth in the construction sector impacts the GDP. And I see 2022 as a positive year for the Nigerian construction industry.

Do you feel Nigeria can construct high-rise buildings?

Nigerian civil and structural engineers are some of the most experienced worldwide, and I would say most confident that we can deliver high-rise buildings in the country. This is even without relying on foreign expertise as most clients would prefer. What I see as a major issue is that of regulation and the enforcement of the said regulations. We have a National Building Code that is yet to be domesticated at the state levels. And various state-level regulations that stakeholders are quite lax with. This perception that Nigerians cannot deliver high-rise buildings is one reason why indigenous construction companies are losing business to foreign firms. And we must do something fast to correct that perception. If not, capital flight and brain drain will continue to affect the industry’s growth. I have said in the past that construction should be left strictly to construction professionals. The practice of anyone who owns land or has money jumping aboard construction projects because they want to save cost needs to stop. Regulatory agencies also must take special care to verify all blueprints and ensure that projects are designed, constructed, and maintained to the highest standards possible. To reduce the incidence of collapsed buildings and the attendant loss of lives and property.

What can be done to build human capacity in the industry?

The skills gap in the construction industry is a reality all stakeholders are all too familiar with and I believe industry culture and poverty have a role to play here. Low productivity is linked to skills gaps and they have huge costs on the economy. According to an analysis by the World Literacy Foundation released in March 2018, illiteracy was estimated to have cost the UK economy £80bn in that year alone through loss of productivity and business earnings. While data for Nigeria might be hard to come by, it is not beyond belief to say over 50 percent of the productivity of the Nigerian construction industry is affected by the lack of skilled workers. It is perhaps one of the reasons why the Federal Ministry of Works and Housing launched the Sector Skills Council on Construction in January 2021.

What can be done to bridge the skills gap in the construction industry?

I would say increased knowledge sharing. It is something we have made part of our model at Dutum Construction Company Limited and we have seen how it has helped us save costs and reduce personnel turnover on our projects. The standard of our work is also improving as we continue to share high-level knowledge and construction industry best practices with the various levels of workers on our projects. If this knowledge sharing is standardized, the entire industry will be better for it. Like I said earlier, Nigeria has some of the most experienced construction industry professionals in the world, but as you move further down the skills pyramid you find a disconnect between those at the top and the middle to lower skills levels. It is necessary to bridge this gap to improve productivity in the sector and grow the sector.

How has the COVID affected the construction industry?

2020 is one year that the entire construction industry globally would like to forget what happened. It was the year that we realized that something beyond warfare and civil disturbances could impact our industry so much. The various restrictions and containment measures meant that projects needed to be put on hold and this was compounded by the shrinking of the economy as a whole. The industry shrunk by 7.7 percent in 2020 as government earnings reduced and budgetary allocations and spending on capital projects dwindled. This of course affected the private sector and we are just seeing signs of growth. As I stated earlier, I believe despite the discovery of newer strains of COVID-19 that the Nigerian construction industry is on a positive rebound. Covid-19 was not all gloom for the industry though. As we have found more agile ways to work and the use of technology that was necessitated by the COVID-19 restrictions has become quite valuable for us and will continue to benefit the industry.

How has the forex scarcity and devaluation of the naira affected the industry?

Foreign exchange scarcity and devaluation is one challenge the entire private sector has no idea how to contend with. We have simply started to innovate around it so that we can continue to deliver value to clients. Naira was devalued twice in 2020 and this affected us in the construction industry because we rely on some imported construction materials for projects. We saw the costs of materials shoot up beyond what our contingency plans could accommodate and this in my view must have been one of the core reasons the sector has experienced stunted growth since then. Then there is the issue of scarcity of foreign exchange which is an ever-present challenge for us. Not only has it reduced foreign portfolio investments but it has also reduced confidence in the Nigerian economy as investors are usually wary of markets where foreign exchange prices are not reflective of market realities. That said, we are hopeful that the various initiatives by the Federal Government to woo investors and bring private sector capital into infrastructure delivery will help us thrive despite devaluation and foreign exchange scarcity realities. I would like to emphasize, however, that we must gradually ease away from the foreign exchange management system and allow the market to dictate the true value of the naira. In the long run, the economy will be better for it.

How are health, safety, and environment management relevant to construction?

Health, safety, and environmental management are critical parts of the construction process. Construction is a high-risk profession and accidents are bound to happen unless health and safety are prioritized. At Dutum, as you will find in most other construction companies, health, safety, and environment is a specific department that is responsible for the observance and protection of occupational health and safety rules and regulations. Along with environmental protection on construction sites. We take HSE seriously and continuously work with partners, clients, and vendors to improve this to reduce the occurrence of accidents, safety hazards, or environmental issues on our projects. For us, a key HSE objective is to reduce the occurrence of fires, collapses, explosions, and harmful substances on our sites. We also focus on reducing our carbon footprint and constantly gauge the environmental impact of our work on the various sites where we work. HSE is a regulatory requirement in the construction industry and I am looking forward to increased widespread adoption to improve the safety and environmental impact of the construction industry.

Last year witnessed a major building collapse in the country. What can be done to stop incessant building collapses in the country?

As I mentioned earlier, two things must be improved; skills in the construction industry and the enforcement of building regulations. We have to make sure that only those qualified and approved to work on construction projects do so and where it is found that corners have been cut or regulations flouted, there must be stiff penalties to serve as deterrence to others. This is the only way we can deter quacks from entering our industry. If these are not implemented, we will find that similar collapses will continue across the country. Our regulatory agencies must look beyond revenue generation and rise to their responsibility of ensuring the safety and standards of buildings. We cannot continue to only pay lip service to the issue of building collapse when another one happens. Prevention is what we must make the norm. Apart from this, we must also adhere strictly to quality building materials. According to the Standard Organization of Nigeria, poor building materials are one of the key causes of building collapses in Nigeria. Cement, iron rods, wood, and other structural materials that maintain the integrity of buildings should not be toyed with and industry professionals should understand that in cutting corners to reduce cost; they are putting lives at risk. I also think that the national standardization of the National Building Code will help greatly in this regard.

How can quality control be ensured in construction?

Again, quality materials are very key here. If we are to maintain quality then we must ensure that the best materials are used on construction projects. Beyond this, the right personnel, who are skilled and have the requisite knowledge to work in the construction industry must be relied upon to work on projects. Quacks who have no idea of industry best practices will only stunt the quality of projects. I would also advise the use of technology; nowadays, there are various construction productivity software and solutions that are helping to improve the standard of projects. Technology has improved collaboration so there is a reduction in miscommunication which usually affects quality control.
Audits are also necessary so nothing is left to chance. And independent eyes can evaluate the quality of work and provide insight into how to improve standards or maintain them.

How will sustainable green construction change the industry?

The construction industry is usually viewed as not energy efficient due to the peculiarities of the trade. The World Green Building Council estimates that the construction industry generates as much as 39 percent of the world’s entire carbon emissions due to the massive consumption of raw materials and the natural resources it uses.
Thankfully, sustainability and green construction are becoming better embraced by executives and professionals in the industry who are beginning to see their benefit for their business and the environment as a whole. Some factors are responsible for this such as, increased government regulations such as the Paris Agreement, the need to save costs in line with recent economic challenges, and increased awareness about environmental concerns. The benefits of green construction are numerous as they are varied. And industry leaders have found that not only does it help to improve their profit margins. But it also improves employee productivity and builds the reputation of construction companies as models of corporate citizens who are socially responsible. This kind of reputation of course increases revenue as studies have shown that socially responsible companies are found to be more effective by clients.

How can private sector financing help to reduce the housing deficit?

Personally, private sector finance coming into infrastructure delivery is one thing I am most excited about going into 2022. Housing makes up over 60 percent of construction projects. And I believe bridging the housing deficit is one major challenge that the private sector will seek to fix with their investments. Making mid-market and mass housing accessible for more Nigerians is the only way to reduce the housing deficit and the government has shown over time that it is now buoyant enough to solve the challenge. Granted, there have been initiatives launched by the Nigerian government to make affordable housing a reality. But I see private sector finance being the game-changer the housing industry so sorely needs. In 2022, I see increased activities in the sector as the revised National Integrated Infrastructure Master Plan and the Infrastructure Fund are activated. There is also the public and private sector focus on affordable housing which I believe will spur growth in the industry.

What specific initiatives will Dutum Construction Company launch in 2022 to grow the industry?

This year, we are focused on improving human capacity in the construction industry. And will be working with our partners to share knowledge and industry best practices with new and prospective entrants in the construction industry. We believe this is critical to improve productivity in the industry and to widen the pool of skilled professionals available. We will also be launching various collaborations within the industry to promote safety, health, and environmental standards. As an indigenous construction company, we are driven by a desire to show that Nigerian projects can be constructed and delivered to the best quality standards by Nigerian firms. And we see increased adoption of HSE standards as a critical lever to help the industry make this point.

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