Overview
The construction industry plays a crucial role in Nigeria's economic growth and development, encompassing a wide range of activities related to infrastructure, building design, planning, construction, and maintenance. This sector significantly contributes to the country's GDP and job creation for both skilled and unskilled workers. It provides vital infrastructure such as roads, bridges, airports, housing, and public facilities, all of which enhance the overall quality of life.
In Nigeria, the construction industry involves various stakeholders, including government agencies, private firms, international contractors, architects, engineers, suppliers, and professionals across the construction value chain. Notably, both local and international contractors and firms actively participate in projects, contributing to the development and successful execution of various infrastructure ventures, spanning from transportation and energy to commercial buildings and public facilities. This emphasis on infrastructure development in Nigeria fosters economic activities, attracts investments, and positively impacts social well-being.
This article delves into the legal and regulatory aspects of Nigeria's construction industry, examining the pertinent legal framework, essential stakeholders, regulatory agencies, and standard contract forms that shape the industry's operations.
Legal and Regulatory Framework for the Construction Industry in Nigeria
In Nigeria, the construction industry operates within a robust legal framework and regulatory system designed to ensure safety, quality, and adherence to standards.
Legal considerations governing the construction sector encompass various essential components, including but not limited to:
The National Building Code, 2018: Serving as a comprehensive manual governing construction practices, the National Building Code outlines regulations and criteria for planning, construction, renovation, and upkeep of structures. It addresses critical areas such as structural stability, fire prevention, electrical setups, plumbing, and accessibility. The code's objective is to enhance safety precautions for both lives and assets within the nation. This code is embraced by the government as a vital tool to prevent unnecessary loss of life and property during construction ventures. It provides crucial directives for material specifications and quality management, ensuring adherence to baseline criteria. Importantly, it aims to safeguard lives and property and promote public well-being and security across various building types. While nationally applicable, individual states retain the flexibility to customise and tailor the code to their unique circumstances and requirements.
Urban and Regional Planning Act, Cap N138, LFN 2004: Governing land use, zoning, and development control in Nigeria, the Urban and Regional Planning Act provides guidelines for land use classifications, building setbacks, building heights, zoning regulations, and other planning considerations. The Act establishes the Development Control Department, responsible for approving and rejecting development permits. It ensures that the grant of a development permit aligns with the conditions attached to a certificate of occupancy or a customary right of occupancy. Additionally, the Development Control Department holds the authority to revoke previously issued development permits, subject to the conditions specified in Section 41 of the Act.
Environmental Impact Assessment Act, Cap E12, LFN 2004: The Environmental Impact Assessment Act (EIA) is the key legal framework governing the significant environmental effects of projects in Nigeria. As outlined in Section 2(1) and (2) of the EIA, any project, whether public or private, cannot proceed without considering its environmental impacts beforehand. If a proposed project is expected to have a significant environmental impact in terms of scope, nature, or location, it must undergo an environmental impact assessment as mandated by this Act. This highlights the importance of assessing and mitigating potential environmental damage prior to project commencement. In cases where negative effects are identified, measures to mitigate them must be put in place; otherwise, project approval may be withheld. Moreover, the Act specifies that activities related to projects under the Mandatory Study List category (as provided in the Schedule of the Act) cannot be undertaken by any Federal, State, or Local Government entity, or their affiliated authorities or agencies until action is taken by the designated Agency, currently the National Environmental Standards and Regulations Enforcement Agency (NESREA).
National Environmental (Construction Sector) Regulations, 2011: The National Environmental (Construction Sector) Regulations (NECR) issued by NESREA is designed to promote responsible environmental practices and effective waste management within construction, decommissioning, and demolition activities. It aims to safeguard the Nigerian environment from pollution and its adverse consequences. The NECR places a strong emphasis on the Duty of Care principle, which mandates proper handling, transportation, and disposal of waste materials by every facility. This principle is particularly crucial due to the potential harm that construction-related waste can pose to both the environment and human health. Notably, Regulation 14 of the NECR expressly prohibits the use of asbestos at construction sites. The regulations also provide guidelines for the appropriate handling of asbestos-containing materials during demolition or renovation projects. Operators are required to remove asbestos materials from structures prior to any potentially disruptive activity to ensure safety and environmental protection.
Regulatory Agencies and Stakeholders
Architect Registration Council of Nigeria (ARCON): This regulatory body oversees the field of architecture within Nigeria. It holds the authority to register and oversee architectural practices in the country. No individual is permitted to create or take complete responsibility for architectural building plans or engage in professional activities unrelated to ship construction or landscape golf links under any name or title incorporating the term "architect," except if they are a Nigerian citizen duly registered with the Council.
The Council of Registered Builders of Nigeria (CORBON): CORBON is established as a corporate entity with regulatory authority under Section 2 of the law. Its mandate encompasses the regulation, oversight, and management of building construction, maintenance, and related practices within Nigeria. CORBON is responsible for governing and supervising the entire spectrum of the building profession, ensuring its adherence to established standards and principles.
Standards Organisation of Nigeria (SON): SON is tasked with creating standards for products, measurements, materials, processes, and services, and promoting these standards at the national, regional, and international levels. They also certify products, aid in producing high-quality goods and services, enhance measurement accuracy, and disseminate information about standards.
NESREA: This agency is tasked with safeguarding and fostering the environment, conserving biodiversity, and promoting sustainable development of Nigeria's natural resources, including environmental technology. The agency is also entrusted with the enforcement of all environmental laws, guidelines, policies, standards, and regulations within the country.
Contract Law and Standard Forms
Within the realm of construction contracts, the significance of having written agreements is underscored by Section 4 of the Statute of Frauds Act, 1677. While the fundamental principles of contracts—namely Offer, Acceptance, Intention to create legal relations, Consideration, and parties' Capacity—serve as guiding beacons for construction contracts, the construction industry employs standardized contract forms, often referred to as "boilerplate contracts." These forms are pre-printed, non-negotiated provisions that streamline the contractual process.
In Nigeria, various prominent types of standard contract forms are utilized, including but not limited to:
The Fédération Internationale Des Ingénieurs-Conseil (FIDIC) Forms: FIDIC contracts hold the distinction of being the most widely used standardised international construction contracts globally. The FIDIC Red Book serves as the principal and prevalent form for projects where the Employer provides design, following the traditional Design, Bid, and Build approach. Payment is based on the measurement of work performed. Meanwhile, the FIDIC Yellow Book, known as a Plant and Design-Build contract, entails Contractor-led design and typically involves lump sum payment.
Joint Contract Tribunal (JCT): The JCT Standard Building Contract is intended for extensive or intricate construction projects that require comprehensive contractual provisions. The JCT contract is tailored to shift risk from the client to the contractor. It stipulates provisions for opening up works for inspection and mandates the contractor to uphold workmanship aligned with the contract.
The Federal Ministry of Works Contract: This contract is a variation of the JCT form.
Two pivotal clauses within construction contracts are the force majeure and dispute resolution clauses. The force majeure clause exonerates liability in the face of unforeseen events, often labelled "acts of god," encompassing natural disasters, wars, and more recently, pandemics. The inclusion of this clause is vital, as it absolves liability for unforeseeable events that could impede construction progress.
The dispute resolution clause outlines the protocol for addressing disputes that may arise. Arbitration is the predominant method for resolving such disputes in construction contracts, governed by the provisions of the Arbitration and Mediation Act, 2023. The parties involved in a dispute have the freedom to choose the methods through which their conflicts can be resolved, as long as they follow measures essential for promoting peaceful coexistence and safeguarding public interests. This clause establishes a structured approach to handling conflicts that may jeopardise the smooth execution of construction projects.
As Nigeria continues its pursuit of robust infrastructure and sustainable development, it is important for stakeholders in the construction sector to uphold safety, quality, and environmental considerations. The construction industry contributes not only to the nation's economic growth but also to its social well-being and future prosperity.
Written By:
Ndidiamaka Ojomah
Associate, Energy Practice Group