Post COVID-19: Nigeria Needs More Local Manufacturing Firms In Building Materials’ Sector – Igbinoba

As a professional member of the built environment, what HSE (Health, Safety and Environment) measures would you recommend for meeting the COVID 19 pandemic demands on construction sites?

Well, I think basically, the usual thing that has been recommended, wash your hands before you get to site in the morning, and then when you finish work; wearing face mask and then the use of the hand sanitizer, while also not neglecting the social distanc­ing at sites too.

I think the basic precaution by health officials is what is accepted. If they do that, it will be okay. And then, they should also avoid touching their faces while at work, even though I don’t know how possible that can be. Just the basic practices as recommended by the health agencies.

For the built environment profes­sionals, are there lessons to be learnt from the socioeconomic disruptions caused by the sudden collapse of industries and commer­cial activities?

A lot! I will tell you; one of the lessons is that the industry does not have a robust infra­structure as technology here is still behind. For example, how do I buy building materi­als without having to go to the market? Largely, the sales of building materials here still revolve around going to the market to make purchases. Meanwhile technologically today, products can be ordered from site. Even the supplier here does not have the techno­logical wherewithal.

So, what we are saying is that, businesses cannot just continue abnormally. The inability of the supplier being able to deploy technology has been a major barrier. Logistics companies have been con­sidered as essential services providers, so they move-in goods. If I could buy construc­tion materials, it means that this logistics guys can actu­ally transport them to site. But right now, I can’t do that because there is no infrastruc­ture for that to happen.

From the look of things, post COVID-19 isn’t going to be funny, especially for the real estate sector, where majority of the materials are imported. What mitigating mea­sures would you suggest to be put in place to avoid a total collapse of the sector?

We need to deepen manufac­turing of building materials. About 55 to 60 per cent of building materials are import­ed. With the devaluation of the naira staring in our faces, it means that there are going to be challenges in the sector. Automatically, prices are going to go up, and then, affordabili­ty will become an issue.

What we need to do is to deepen local content. The Fed­eral Government should look more along the value chain of real estate and see how they can help with building materi­als in term of setting up man­ufacturing firms of building materials.

They should look at how the Bank of Industry or Develop­ment Bank of Nigeriacan help to set up or strengthen indus­tries that supply into the real estate value chain.

For example, just simple manufacturing of door knobs or even the doors themselves, we don’t have the industries that do them here; that is where we should be looking at via assistance from gov­ernment institutions like the Central Bank of Nigeria (CBN), Development Bank and the Bank of Industry.

They should provide incen­tives that can make people focus on this production lines.

For ongoing projects with existing loan obligations, how should parties to the loan obligations respond to impact of COVID 19 on their contrac­tual agreements?

I am not a lawyer, but I think that COVID 19 is a force majeure. When force majeure happens, there are ways con­tractual obligations are being looked at. There are contractu­al obligations under the force majeure clause in any trans­action. I think both parties should look at how they can manage the transactions that fall under this.

On the other hand, I think the banks might want to give some forms of moratorium for the period within which this pandemic has disrupted transactions.

But do you think the terms and conditions of the loan obligations still remain valid in this case and who bears the brunt of the nonperfor­mance of the loan obligations?

That is why I say a force majeure can come in. A force majeure says it’s an act of God, in which case, you now begin to start looking at the contrac­tual obligations of the parties and find a way to ameliorate the situation.

As for who bears the brunt of the loan obligations, both parties do. But you will dis­cover that many banks may want to put the liability on the borrowers alone, and this shouldn’t be. You should look at the force majeure clauses and look for a way of giving a moratorium or even interest waver or deferral, because the truth is, real estate is a long term project, so it’s different from an import loan facility and hence, cannot be treat as such.That is why both parties need to sit down together.

What would you advice construction project employers, who may not be able to pay salaries because of the challenge of nonpayment by clients by reason of non-delivery of ser­vices caused by the lockdown?

COVID 19 was neither caused by the employer nor the employees, so, I think a sort of stakeholders’ engagement should take place. I don’t think the employers should just cut off salaries of staff because it wasn’t the staff who prayed that the pandemic should hap­pen. But I also think that they should plan to meet at a middle ground.

You know what matters to both the staff and the em­ployer is the sustainability of the organization. If you force the organization to pay you a 100 per cent today and they cannot survive tomorrow, what happens? So, there should be an agreement between the employer and staff that this is what they can do.

In this case now, how would you describe the salary obligation of the employer over a lengthy period of lockdown? Should they terminate the services of the employees or convert the lockdown to an unpaid leave period?

For the employees to get their salaries, the organization needs to be in existence. The employer would have to engage some of their staff. You know your staff are your best assets. They are the ones making the company to exist. They should also start looking at how many of their staff can work from home in such a way that even when you reduce their salaries, it doesn’t affect them much because they didn’t have to buy fuel or pay T-fare to come to work. So, this is the time to look at other options of how to reduce unnecessary expenses. If you have some employees working from home, it can reduce the wage bill.

Can you assess the general impact of COVID 19 pandemic on the built environment?

It has affected production and construction activities; it has also affected the income of the people who are working there; it is definitely going to affect the outcome of what they also do. You know that even in the macro economy, it has affected the dollar rates. So the contractor who is going to import items will have to deal with a higherexchange rate.That also is going to affect your project.

When the country entered a reces­sion in 2016, the real estate was one of the first to be affected and never fully recovered before this pandem­ic. What fate do you think awaits the sector in the current situation?

Real estate has cycles, so it will definitely recover. It just needs the parties to the trans­action to be patient and know that yes, with time, everything is going to fall back into place. That is why we are asking that banks should be giving mor­atorium as well as deferred payments because they know that once everything picks up again and this COVID 19 is over, it will come back. That is for sure.

Roland Igbinoba is the founder of Pison Housing Company Limited and former Managing Director, FHA Mortgage Bank Limited.

Source: Independent newspaper