Nigerian Construction Sector Surges, Outpacing National GDP Growth
Nigeria’s construction sector has demonstrated robust performance, significantly outpacing the country’s overall economic expansion in the first nine months of 2025. The sector generated N13.83 trillion in nominal terms, achieving a real growth rate of 5.57 per cent. This figure stands in stark contrast to Nigeria’s aggregate GDP growth of 3.98 per cent during the same period. Industry observers attribute this impressive showing to a confluence of factors, including the positive impact of recent economic reforms, increased revenue streams at subnational government levels, and a palpable rise in investor confidence.
Data released by the National Bureau of Statistics provides a granular view of this growth trajectory. In the first quarter of 2025, the sector contributed N5.06 trillion to the GDP. This was followed by N4.02 trillion in the second quarter and N4.75 trillion in the third quarter, culminating in a total output of N13.83 trillion for the nine-month period. This represents a substantial year-on-year increase of 18.35 per cent, compared to the N11.69 trillion recorded in the corresponding period of 2024.
Drivers of Construction Sector Expansion
The strong performance of the construction sector has been lauded by industry experts, who highlight its outperformance relative to many other segments of the Nigerian economy. Dr. Muda Yusuf, Director of the Centre for Promotion of Private Enterprise (CPPE), noted that the construction industry’s 5.57 per cent real growth rate significantly surpassed that of sectors like manufacturing, which registered approximately 1.25 per cent real growth in the same timeframe.
Dr. Yusuf pointed to several key drivers behind this expansion:
- Impact of Economic Reforms: The ongoing implementation of economic reforms has created a more conducive environment for business and investment, indirectly benefiting the construction sector.
- Improved Subnational Revenues: A notable factor has been the increase in revenues across various tiers of government. Enhanced allocations to state and local governments have directly translated into higher capital expenditure on infrastructure and public projects. Dr. Yusuf elaborated, “We are seeing a lot of projects at the subnational level because their revenues have increased, both in nominal and real terms. Many of the subnationals are building offices, schools, roads, and flyovers, and that has boosted the construction sector.”
- Federal Government’s Infrastructure Focus: The Federal Government’s renewed emphasis on infrastructure development has provided further impetus. Projects such as the ambitious Lagos–Calabar Coastal Highway have been instrumental. The government secured substantial financing for this project, including $1.126 billion for Phase 1, Section 2, finalised in December 2025, and $747 million for Phase 1, Section 1, closed in July 2025. These large-scale public works directly stimulate construction activity.
- Resurgent Private Investment: Beyond public spending, private investment, particularly in the real estate market, has emerged as a significant contributor. Dr. Yusuf observed that attractive returns on investment in property, driven by capital appreciation, have made real estate a highly sought-after asset class. This has drawn both domestic and international investors, including those from the diaspora. The vibrant activity in the real estate sector, which contributed N43.79 trillion to GDP over the nine months, has a direct spillover effect on construction, as increased property transaction revenues fuel further building projects.
The Persistent Challenge of Affordable Housing
Despite the sector’s impressive growth, a critical challenge remains: the severe housing deficit, particularly for low- and middle-income segments of the population. Industry experts universally agree that the current construction boom is primarily catering to high-income earners and government-led infrastructure projects. Projects aimed at low- and middle-income households are often deemed unprofitable for private developers without substantial government intervention.
Dr. Kolade Adepoju, a real estate expert, echoed this sentiment, noting that most ongoing construction projects are concentrated at the upper end of the market. He cited examples of high-value developments where property prices range from N50 million to N200 million, clearly inaccessible to the majority of the population.
The fundamental issue, as explained by Dr. Adepoju, lies in the commercial viability of affordable housing. He stated, “There is no investor that will come and focus on housing for the lower class because it is not profitable. It has to be the government, through subsidies and social housing.” The rising costs associated with construction, even when excluding land acquisition, make it commercially unfeasible to build and sell homes at prices affordable to lower-income households. A simple two-bedroom apartment, for instance, can incur construction costs nearing N50 million, making it impossible to sell at a comparable price point.
The Path to Inclusive Growth
The consensus among stakeholders is that for the construction sector’s growth to become more inclusive and address the pressing need for affordable housing, government intervention is indispensable. While the private sector plays a vital role in driving investment and innovation, its focus will naturally gravitate towards profitable ventures.
Recommendations for fostering more inclusive construction growth include:
- Government Subsidies and Social Housing Programs: Direct government support through subsidies and dedicated social housing initiatives is crucial to make housing affordable for low- and middle-income earners.
- Policy Frameworks for Affordable Housing: The government needs to establish clear policy frameworks that incentivize private sector participation in affordable housing projects, potentially through tax breaks, land allocation, or joint venture partnerships.
- Addressing Rising Construction Costs: Strategies to mitigate the rising costs of construction materials and labour could also improve the affordability of housing projects.
The current economic landscape in Nigeria presents a dual reality: a thriving construction sector driven by public and high-end private investment, alongside a widening gap in affordable housing. Bridging this gap will require a concerted effort, with the government playing a pivotal role in ensuring that the benefits of this economic expansion are shared more broadly across society.
