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Infrastructural activities in the Construction and Real estate sector reduced by 7.4 per cent in its contribution to Nigeria’s real Gross Domestic Product in Q1 2023.
According to latest data released by the Nigeria Bureau of Statistics recently, the sector contributed a total of N8.33tn in the quarter compared to the N9tn generated in the fourth quarter of 2022.
The NBS attributed the decline to the adverse effects of the cash crunch experienced during the quarter.
The cash scarcity caused by the naira redesign policy of the Central Bank of Nigeria had pushed Nigeria’s Gross Domestic Product growth below global projections of the World Bank, International Monetary Fund and the African Development Bank.
The decline is slightly below a recent projection by KPMG that Nigeria’s GDP will grow at a relatively slow pace of 3 per cent in 2023 due to challenges associated with the naira redesign and political transition.
A breakdown analysis showed that the real growth rate of the construction sector reduced by 1.56 per cent points from the rate recorded in the previous year.
The NBS, however, noted the sector contributed 11.79 per cent to nominal GDP in the first quarter of 2023, higher than the 9.68 per cent it contributed a year earlier and higher than the 10.16 per cent contributed to the fourth quarter of 2022.
It read, “Construction contributed 11.79 per cent to nominal GDP in the first quarter of 2023, higher than the 9.68 per cent it contributed a year earlier and higher than the 10.16 per cent contributed to the fourth quarter of 2022.
“The real growth rate of the construction sector in the first quarter of 2023 was recorded at 3.27 per cent (year-on-year), lower by 1.56 per cent points from the rate recorded in the previous year.
“Relative to the preceding quarter, there was a decrease of 0.53 per cent points. Quarter-on-quarter, the sector grew by 2.78 per cent in real terms. Its contribution to total real GDP was 4.22 per cent in the first quarter of 2023.”
For the real estate sector, the statistics agency recorded a relative decline of 4.46 per cent compared to 5.62 per cent contributed in the fourth quarter of 2022.
The report stated, “In nominal terms, Real Estate Services in the first quarter of 2023 grew by 2.36 per cent, lower by 8.47 per cent points than the growth rate reported for the same period in 2022 and lower by 8.25 per cent points compared to the preceding Quarter.
“On a quarter-on-quarter, the sector growth rate was -28.39 per cent. The contribution to nominal GDP in Q1 2023 stood at 4.46 per cent, relative to 4.92 per cent recorded in the first quarter of 2022 and 5.62 per cent in the fourth quarter of 2022.
“Real GDP growth recorded in the sector for the first quarter of 2023 stood at 1.70 per cent, lower than the growth recorded in the first quarter of 2022 by 2.74 per cent points, and lower by 1.08 per cent points relative to Q4 2022.”
The PUNCH reports that housing experts before the data release had predicted a reduction in the sector’s GDP contribution.
They insisted that the inability to pay artisans, provide building materials for construction and increased the cost of production had halted any form of revenue contribution to the GDP, leading to an increase in housing deficits.
At a residential development visited during the period in Jabi, the site engineer, who spoke on the condition of anonymity, told our correspondent that labourers were now jobless, adding that the level of production had reduced drastically.
“For instance, the labourers who were supposed to work on-site today left because they wanted cash payment and they don’t have a bank account. We had to increase the workload on those who have an account so we can achieve something today.
“Currently, the naira scarcity has affected our productivity; work on-site now is not full scale.
“Some of them even think we are wicked because they don’t believe that we don’t have the cash to pay them,” he said.
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