KEYNOTE ADDRESS BY THE HON. MINISTER OF HOUSING AT THE STAKEHOLDER FORUM ON DEVELOPMENT OF FISCAL INCENTIVES FOR MANUFACTURERS OF LOCAL BUILDING MATERIALS COMPONENTS IN NIGERIA

Protocols:

1. I want to start by underscoring the importance of building materials in the overall cost of constructing a house.

2. On average, building materials account for approximately 50% to 70% of the total cost of building a house.

3. Cement alone can account for 15% to 20% of the total cost, while steel and reinforcement materials make up another 10% to 15%.

4. Roofing materials account for 5% to 10%, doors, windows, and finishes can take up 10% to 15%, and electrical and plumbing materials round off with 5% to 10%.

5. Sand, gravel, and aggregates contribute 5% to 10%, and blocks and bricks add another 5% to 10%.

6. These figures highlight a clear reality: the cost of building materials is a major determinant of housing affordability. If we can reduce the cost of these materials through local production and strategic fiscal incentives, we can significantly lower the overall cost of housing construction. This, in turn, will make housing more accessible to the average Nigerian.

7. The issue of boosting local manufacturing of building materials has been a longstanding one. It is worth noting that the Building Materials Producers Association of Nigeria (BUMPAN) was formally established on 24th March 2004, with the objective of identifying, mobilizing, and sensitizing small and medium domestic producers of building materials and components to the challenges and economic potential.

8. BUMPAN was envisioned to lay a solid foundation for the development of robust, effective, and economically viable small and medium-scale industries for the production of building materials.

9. It was also expected to facilitate the production of affordable, target-priced houses that would be within the reach of contributors to the National Housing Fund.

10. Similarly, BUMPAN was designed to provide backward and forward linkages in housing production, encompassing building materials and the associated small and medium-scale industries. These industries were to offer employment opportunities, create wealth, and contribute to the economic progress of the country.

11. Today, for so many reasons,  we cannot really point to what BUMPAN has achieved.

12. The local manufacturing of building materials has the potential to create thousands of jobs, stimulate economic growth, and reduce our reliance on imported materials. By supporting local manufacturers, we can foster innovation, improve quality, and reduce costs, making housing more affordable for Nigerians.

13. Local production of building materials will directly contribute to reducing the cost of construction, thereby making housing more accessible to the average Nigerian. This aligns with the Federal Government’s commitment to providing affordable housing for all.

14. As we discussed yesterday, the government is actively working to establish building materials manufacturing hubs across the country. These hubs will serve as centralized locations where manufacturers can access shared infrastructure, reduce production costs, and benefit from economies of scale.

15. The rationale behind this initiative is clear: by clustering manufacturers in designated hubs, we can create a synergistic environment that fosters collaboration, innovation, and efficiency. These hubs are to also provide access to modern technology, training programs, and research and development facilities, enabling manufacturers to produce high-quality materials that meet international standards.

16.  Moreover, the hubs will be strategically located to ensure easy access to raw materials and distribution networks, further reducing transportation costs and enhancing competitiveness.

17. In this regard, the suggestions yesterday  that these hubs should be established in existing free trade zone areas is worthy of serious consideration. Free trade zones already offer significant advantages, such as tax incentives, reduced regulatory burdens, and access to markets. By leveraging these zones, we can accelerate the establishment of manufacturing hubs, reduce initial setup costs, and attract both local and foreign investments.

18. Additionally, empowering producers of key materials like cement to scale up their operations at their existing locations is another viable option. By providing targeted support to these producers, such as access to affordable financing, tax incentives, and infrastructure improvements, we can enable them to increase production capacity, lower costs, and meet the growing demand for building materials without the need for entirely new hubs. This approach not only reduces the cost and time required to deploy new hubs but also maximizes the use of existing resources and infrastructure.

19. We are taking this route because we recognize that local manufacturers of building materials face several challenges, including high production costs due to inadequate infrastructure, limited access to affordable financing, competition from imported materials, and inconsistent government policies and regulations.

20. These challenges have hindered the growth of the sector and limited its contribution to the economy. That is why we are taking proactive steps to create an enabling environment for local manufacturers.

21. Fiscal incentives are one of the most effective tools at our disposal. These incentives can include tax holidays or reduced tax rates for local manufacturers, customs duty waivers on the importation of machinery and raw materials, grants and subsidies to scale up production, access to affordable financing through low-interest loans, and public-private partnerships to drive innovation and growth. I am sure that more on this will be discussed at this session.

22. In conclusion, the development of fiscal incentives for manufacturers of local building materials is not just a policy option; it is a necessity for the growth of our economy and the realization of our housing goals.

23. Thank you for your attention, and I look forward to a productive discussion.

God bless the Federal Republic of Nigeria.