Optimising the Capacity of Nigeria Construction Sector for Socio-economic Sustainability

Aims: In this period of economic quandary, Nigeria needs to make workable and precise economic policies and decisions based on accurate information in all sectors of the economy. However, dearth of empirical study on construction sector for economic decisions has made this aspiration more tasking. This study therefore, was aimed at examining the capacity of the construction sector in the socio-economic development of Nigeria using economic data on the construction sector and the aggregate GDP.

Study Design: Quarterly data on construction sector and gross domestic product (GDP) between 2010 and 2015 were obtained from various electronic publications of the National Bureau of Statistics (NBS). The study chose 2010 as the base year because the re-based National Account of Nigerian economy was at the 2010 basic price.

Place and Duration of Study: Department of Building, Nnamdi Azikiwe University, Awka Nigeria between August 2015 and May, 2016.

Methodology: Econometric techniques such as unit root test, cointegration test, Granger causality test as well as ordinary least square regression method were employed to analyse the capacity and relationship of construction sectors output with the aggregate economy (GDP).

Results: The study established that there is significant strong positive relationship (R = 0.709) between the construction sector and the real GDP. The study further established that there is strong bi-directional causal relationship between the aggregate real GDP and the construction sector output of Nigeria. The study also found that about 50.33% (R2 = 0.503305) of the proportion of variations in the real GDP can be explained by the construction sector output. Using a regression model, the study finally developed a model through which the real GDP can be predicted by the construction sector output.

Conclusion: The result implied that the construction sector Granger causes the total GDP and vice versa. It also implied that both the construction sector and aggregate GDP greatly influenced each other in large proportion. It can therefore be deduced from the result of this study that the Nigeria construction sector holds great potentials for improving the national economy through its networks of activities. In this regard, the economic policy makers should closely study and monitor the construction sector because of its propensity for achieving socio-economic sustainability through GDP improvement, improvement in Gross Capital Formation and employment generation.