FG plans Free Trade Zone hubs to boost local building materials

• Published On: 23 February 2025 at 19:21

The federal government is looking into establishing manufacturing hubs for local building materials in free trade zones across the country.

This initiative aims to use the advantages of these zones, such as tax breaks, simplified regulations, and market access, to boost local production, lower construction costs, and increase housing affordability.

Musa Dangiwa, the Minister of Housing and Urban Development, revealed this during his keynote address at Nigeria's Stakeholder Forum on Developing Fiscal Incentives for Local Building Material Manufacturers.

He mentioned that a proposal to use free trade zones was made during the forum. This was stated in a press release posted to the ministry's website on Thursday.

"The hubs will be strategically located to facilitate access to raw materials and distribution networks, lowering transportation costs and increasing competitiveness.

"In this regard, yesterday's suggestion that these hubs be established in existing free trade zone areas deserves serious consideration. Free trade zones already provide significant benefits, such as tax breaks, lower regulatory burdens, and market access. Dangiwa stated that by leveraging these zones, we can accelerate the establishment of manufacturing hubs, lower initial setup costs, and attract both domestic and foreign investment.

He went on to explain that building materials account for roughly 50% to 70% of total construction costs, with cement accounting for 15% to 20%.

He added that other materials, such as steel, roofing, doors, windows, electrical, and plumbing components, have a significant impact on overall construction costs.

Dangiwa stated that another strategy being considered, as suggested during the forum, is to help key material producers, such as cement manufacturers, expand within their existing facilities.

By providing affordable financing, tax breaks, and infrastructure upgrades, the government hopes to assist these producers in increasing capacity, lowering costs, and meeting rising demand without the need for new hubs.

He explained that this strategy optimizes existing resources, reduces costs and timelines, and addresses key challenges for local manufacturers, such as high production costs, limited financing, import competition, and policy inconsistencies.

Dangiwa added that the plan to establish building materials hubs across the country is consistent with previous efforts to promote local manufacturing, such as the formation of the Building Materials Producers Association of Nigeria in 2004.