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Development of an inclusive, innovative operating model for Indigenous Construction Companies in Lagos State

A select number of indigenous Nigerian Construction Companies have put in significant effort to distinguish themselves in the market and to employ practices that are considered to be the “gold standard” for the building industry in Lagos State. These companies have remained ethical and committed despite working in a business environment that does not always reward such high standards.  Professionalism like this undoubtedly leads to success and such success does not go unnoticed.

As a result, the market is experiencing significant crowding-in by lesser qualified firms who see opportunities that are within reach.  The effects of this market trend have been far reaching and the operating environment has become more difficult for all players alike. Some clients now find it less easy to distinguish the good construction companies from the charlatan; some practices still thwart their best efforts (such as the 5% retention fee they often get cheated out of); or multiple taxation issues and other government policies that constrain their ability to grow and operate efficiently.

The Dfid funded Growth & Employment in States Project - Construction & Real Estate (GEMS 2) facilitated a breakfast meeting to identify, discuss and craft practical solutions to these and other emerging issues posing a risk to the profitable growth and sustainability of theses business in the short, medium and longer terms and the result of this was a recognition and commitment to establish pioneer group to take the lead in changing the landscape of the construction industry in Nigeria. They have called themselves the League of Construction Companies (LoCC).

The construction industry in Nigeria is a huge employer of labour and the greater number are artisans from the low-income social class consisting of plumbers, electricians, carpenters, etc. The LoCC has huge potential for improving practices and standards within the Nigerian construction industry thereby attracting bigger projects thus increasing both volume and profitability of work done by the indigenous construction companies.. This is expected to lead to increased employment rates and better incomes within the industry for artisans who meet the standards; creating a demand-pull for better practices in the industry. It should therefore improve the income and standard of living of numerous artisans employed in the industry. These artisans currently face competition from their counterparts migrating from other ECOWAS countries however; achieving the quality standards demanded by the LoCC means that they would invest primarily in local talent rather than the foreign artisan.

The primary reason for approaching BIF was to be a sounding board on the potential effectiveness of a special group of indigenous business owners. BIF has the experience and capacity  to draw on credible resources who understand in great detail, what it means to work within  the inclusive business terrain.  In addition, even though GEMS 2 is a Dfid-funded project, it made financial sense to consolidate our efforts and achieve overall value for money whilst utilising the expertise input of BIF.

The BIF support has helped, through the consultant employed, to develop of an inclusive, innovative, operating model for the LoCC.  This model highlights how best to organise the administration; give a steer on how best to construct the organisation’s constitution (highlighting membership, entry criteria, funding criteria, code of conduct, disciplinary procedures, roles and responsibilities, meeting frequency, board structure & composition, etc.); how financial sustainability could be achieved; the types of partnerships required for optimum leverage in advocacy by the LoCC. Specifically the following have been achieved to date:

1. An agreement on substantial amount for membership fees

2. An agreement to incorporate the LoCC as limited by guarantee and the appointment of service provider to facilitate this process and to be paid for by the LoCC

3. The establishment of 4 member headed committees namely;

  • Membership committee,
  • Advocacy and Stakeholder Engagement committee
  • Value Chain and Human Capital Development committee
  • Disciplinary committee

4.The establishment of an interim secretariat until the LoCC stabilizes its operations, finances and initial set-up. This is deemed more cost effective and most practical.

5. An understanding and agreement for the LoCC to focus primarily on the untapped private sector market and to proactively pursue opportunities within this sector  rather than government contracts. The latter is not considered high priority because of many reasons including politics, time involved, corruption,  just to name a few.

LoCC is now on the path to institutionalising themselves in order to start addressing some of the concerns they have.

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Comment by Tom Harrison on July 26, 2012 at 14:33

Hi Rex, many thanks for this informative and interesting blog.  We in the BIF Nigeria team are very happy to be able to assist the GEMS projects.  In my way of thinking, (which is probably a bit simplistic), GEMS are able to scan a whole market sector and identify the market players and the potential points of leverage to make the whole market system work better with an 'outside -in' approach.  BIF is constituted to start with an individual business (or a grouping of aligned businesses as with the LoCC) and help them to achieve business and social objectives working from 'inside-out'.  When we put the two together, as we have with our support to the LoCC, then very good things can happen.

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