Nigeria’s construction sector is facing mounting pressure after costs surged by 20 percent within five months, driven largely by rising material prices, energy costs, and global supply chain disruptions, a new industry report has revealed.
The report, published by Fortren & Company and authored by its Chief Executive Officer, Martin Uche, shows that the sharp increase occurred between December 2025 and May 2026, affecting project delivery timelines and investment decisions across the country.
According to the report, the spike in costs is closely linked to escalating geopolitical tensions, particularly the ongoing Iran–Israel conflict, which has disrupted global trade routes and driven up freight and energy prices.
A key pressure point has been the Strait of Hormuz, a critical global oil transit corridor that has faced severe restrictions since early March 2026. The disruption followed Iran’s response to coordinated United States and Israeli strikes that began on February 28, leading to a sharp decline in commercial shipping activity through the route.
The report noted that these disruptions have significantly affected logistics and supply chains worldwide, with direct consequences for construction markets across Africa, including Nigeria.
“Fortren & Company’s tracking of construction input and energy cost indices across six African markets shows an average increase of 20 percent over the five months to May 2026,” the report stated, adding that the surge has been largely driven by freight bottlenecks and rising fuel costs.
Nigeria has emerged as one of the most affected markets due to its heavy reliance on imported construction inputs such as cement, steel, and finishing materials, as well as its dependence on diesel-powered construction processes.
The report identified cement, steel, and finishing materials as the hardest hit, recording the steepest price increases over the review period. As a result, contractors are increasingly abandoning fixed-price contracts in favour of indexed pricing models that allow costs to adjust in line with market conditions.
Developers, on their part, are adopting more cautious strategies, including delaying projects, renegotiating contract terms, and scaling down specifications to remain within budget. Industry players say the widening gap between projected and actual development costs is forcing a rethink of project feasibility, especially for projects initiated under earlier, more stable pricing assumptions.
Beyond short-term pressures, the report warned that the current trend reflects a broader structural shift in Africa’s real estate and construction markets rather than a temporary inflation spike.
Elevated energy prices, coupled with persistent disruptions to global freight systems, have effectively raised the baseline cost of development activity. This has left import-dependent economies like Nigeria more exposed to global oil price volatility and external shocks.
The growing shift toward indexed and phased contracting models is also reshaping how projects are financed and executed. While these approaches offer flexibility and risk-sharing between developers and contractors, they may also slow project timelines and complicate funding arrangements.
Analysts say the ripple effects are already spreading into the wider real estate market, with rising construction costs beginning to push up property prices, rents, and overall affordability in major urban centres.
Meanwhile, uncertainty surrounding the Strait of Hormuz continues to weigh heavily on global energy markets. The route accounts for roughly 20 percent of global seaborne oil shipments, and ongoing restrictions, linked to security threats, maritime attacks, and insurance challenges, have reduced traffic to a fraction of normal levels.
Although there have been indications of possible diplomatic progress toward reopening the corridor, full normalisation remains uncertain.
Until global supply chains stabilise, stakeholders warn that Nigeria’s construction sector could face sustained cost pressures, with significant implications for infrastructure development, housing delivery, and investment across the economy.
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