After 6 consecutive quarters of negative growth starting from Q2:2015 up until Q4:2016, the Nigerian construction sector has finally swung out of its recession. Data retrieved from the Nigerian Bureau of Statistics (NBS) shows that the sector only just made it out of negative territory, growing 0.15% in the first quarter of 2017.
The NBS defines the construction sector in Nigeria as the value of work done in the construction of buildings, civil engineering and specialised construction activities with consumption including cement, metal/iron bars, wood, gravel, stone and more.
Since the introduction of invalid items for FOREX, the construction sector went into free fall as multiple items on the list were construction sector related. This was worsened by a year-long spurt of rapidly increasing inflation during 2016, which has slowed during 2017. While many of the items are still invalid for FOREX, improved access to US Dollars and other foreign currencies by way of sustained interventions and currency management efforts from the Central Bank led to increased activity in the sector. These efforts saw the parallel market rate fall from a high of N520/$ in February to ±N383/$ levels by the end of March. Though construction materials remain costly, improved access to FOREX at more affordable rates has made costs slightly more bearable.
Nigeria as a whole remained in recession during Q1:2017, contracting by -0.52% and the real estate services sector followed a similar trend, growing at -3.1% during Q1:2017. This was a significant improvement for the real estate services sector as it contracted -9.27% during Q4:2016. The real estate services sector records the sum of fees for services rendered through data retrieved from tax authorities.