Insights Into Why Many Buildings In Nigeria Are Yet To Be Completed

Abandoned buildings are not so difficult to find around the country. From regular bungalows to duplexes, to buildings with multiple storeys, across the country, there are multiple uncompleted buildings. Known to eventually become a den for men of the underworld, these buildings remain that way for a varying number of years.

 A survey carried out in 2016 showed that there are about 4,000 uncompleted or abandoned projects belonging to the Federal Government of Nigeria with an estimated cost of about N300 billion which will take 30 years to complete. This figure relates only to Federal Government projects, aside from other tiers of government, not to mention private sector projects, whose data is not readily available.

There are a number of reasons these buildings remain uncompleted and while the reason differs for each building, there are similar reasons. In this article, we offer insight into some of these reasons.

What are abandoned buildings?

Abandoned buildings are buildings whose construction have become suspended. The term accounts for buildings at various levels of construction which are still not completed. It involves an act of discontinuing any activities or maintenance works on such a development project within a time frame of the contract agreement and with no intention of returning to the development.

Abandoned building projects are a resultant effect of any development projects that have started at an earlier date but which the construction work for one reason or the other has stopped. Abandoned building projects adversely affect the property values of buildings nearby.

 Abandoned buildings also reduce the aesthetics of the neighborhoods, thereby leading to blighted areas. In Nigeria, rental value reduces significantly in areas with a number of abandoned building projects as many individuals believe that the presence of a number of those buildings connotes that trouble is only a mile away. Why they believe this isn’t far fetched; many of the abandoned buildings become inhabited by all sorts of people. A regression analysis shows that the rental values of properties across Nigeria is  significantly affected by distance, and numbers of uncompleted/abandoned buildings.

Here are some of the reasons for slow completion of buildings:

Compliance and Approvals

According to the World Bank’s 2020 Ease of Doing Business Index, Nigeria ranked 183 out of 190 countries when Registering property, and 55 of 190 countries when Dealing with Construction Permits. Though the index has noted significant progress in Dealing with Construction Permits, growing from 171 of 189 countries in 2015 to 55 of 190 countries in 2020, property developers and investors still point to approvals and permits and a key pain point. 

Delays in this aspect go beyond slowing down the initial planning and conceptualisation phase but can also affect in-construction progress as changes to the design which require fresh approvals can occur quite frequently. Moreover, surprise charges from governmental agencies who are rent-seeking typically lead to periods where construction sites are shut down until the issues are resolved. 

Some efforts have been made by State governments in Nigeria, especially Lagos, to ease these processes by attempting to digitise their databases, improve transparency or consolidate fees, however, more work needs to be done.

If changes are made to the design, a fresh approval is needed. Asides these, charges from the government constant trouble from street men popularly known as OmoOnile poses a threat to building completion. These individuals can at any time bring up dues to be and if not paid they forcefully discontinue ongoing work on a project. Many times, an ongoing crisis between this individuals becomes physical and many property owners have to discontinue building until a later time.

Changes in Demand and other Market Forces

The building of properties particularly by real estate developers is primarily driven by demand. Changes in the demand for certain properties that may end up being a loss for a developer may cause a delay in the completion of the project. Changes may convince the developer to slow down, stop to reconsider or drive the financiers to stop the flow of capital.

A change in market forces may also adversely affect building completion, a  few examples of this over the past decade include the oil price induced recession during 2016, devaluation of the Naira, excess supply office space on the market after 2016, the post-Ebola reduction in hotel occupancy rates and the market-wide COVID market shake-up among others. 

Lack of funding

A general building idea Nigerians have us to build as you go. What this means is that whatever money is at hand us used to complete what it can until another money is made available for further building.

It is because of this that if the availability of funds becomes delayed until a later time, the building also takes on an extended time if delayed. 

Without proper funding, contractors cannot be paid and progress will either slow down significantly or come to a complete halt. 

Delay in payment to contractors and other relevant parties can cause serious problems in the successful execution of construction projects in the country. It causes several problems to the contractor and other participants.

Research has discussed the causes of abandonment of different building project. This includes but is not limited to poor risk management, incorrect estimation, lack of available skilled personnel, misunderstanding of the work requirement, inadequate planning, corruption and communication gap, inadequate finance, inflation, the death of the client, dispute, natural disaster, faulty design, etc.

These results are consistent with other location specific studies around the country, for example a study found that wrong estimates, inflation, inadequate planning, poor risk management, inadequate finance, etc., are the significant factors causing abandonment of building projects in Uyo. It also found that abandoned building projects adversely affect the property values of buildings nearby. Abandoned buildings also reduce the aesthetics of the neighborhoods, thereby leading to blighted areas. The regression analysis shows that the rental values of properties in the study area is significantly affected by distance, and numbers of uncompleted/abandoned buildings. The study recommended that promoters of building projects should commission studies to determine the feasibility of their proposals to avoid unnecessary wastages of valuable resources.

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