Why Your Cement is N11,000 and Your 3-Bed is N75M – The Dollar You Don’t See Inside Your Blocks
Introduction: The House You Built is 70% Dollar
You think you built your house with Naira. You didn’t.
You built it with Dollars wearing Naira clothes.
Check:
- Cement – N11,000. Limestone is local, but kiln fuel is gas priced in dollars, gypsum is imported, bags are imported, machines are imported, spare parts are dollars.
- Iron rod – 100% dollar. Scrap + billet + energy + import.
- Tiles – 100% dollar if imported, 70% dollar if “made in Nigeria” – glaze, ink, machines are dollar.
- Paint – 60% dollar – chemicals, titanium, binders.
- Lift, AC, POP cement, aluminium, glass, plumbing fittings – dollar.
- Even sand – dredger engine is diesel priced in dollars, tipper is dollar.
On a standard luxury building in Lagos today, 55% to 75% of your cost is directly or indirectly linked to FX. That means when FX moves from N1,500 to N1,900, your house cost moves 30% even if you didn’t add one block.
This is why every developer would say “Dollar don kill us” – because dollar is inside the block.
Now let’s breaks down how FX impacts construction and real estate, why it kills profit, and how smart developers survive it.
PART 1: The 6 Entry Points Of FX In The Construction Industry
Most people think FX only affects imported tiles. No. FX enters through 6 doors:
1. Direct Imports – The Obvious Door – 30% of Cost Tiles, sanitary wares, doors, kitchen, lights, lifts, AC, aluminium profiles, glass, iron rods. You pay dollar at port. When dollar moves, price moves same day.
2. Indirect Imports – The Hidden Door – 20% of Cost Cement, paint, POP, cables. Made in Nigeria, but raw materials, chemicals, machines, spare parts are dollar. Lafarge says gas is dollar-indexed. So even “Made in Nigeria” is dollar.
3. Energy – The Invisible Door – 15% of Cost Diesel N1,100 per litre – dollar. Gas for factory – dollar. Your generator on site burns dollar. Your block factory burns dollar. Every block has diesel inside.
4. Equipment & Logistics – The Movement Door – 10% of Cost Excavator, crane, tipper, truck – bought in dollars, rent in dollars. A tipper of sand from Ogun to Lekki – diesel is 60% of cost. Dollar moves, transport moves.
5. Finance – The Money Door When FX is unstable, CBN increases interest rate to defend Naira. So construction loan moves from 22% to 32%. Your N400M loan interest increases N40M per year because of dollar.
6. Labour – The Last Door When FX jumps, inflation jumps. Rice moves from N70k to N100k. Your artisan says “Oga, increase daily pay.” Labour is Naira but adjusts to dollar inflation within 60-90 days.
Total: Add all 6 doors = 55-75% of your project is dollar.
PART 2: The Real Impact – 8 Ways FX Kills Construction and Real Estate
1. Cost Overrun – The 40% Killer
Example: In January 2023, FX was N750/$. You budgeted 3-bed terrace at N35M to build.
- Iron 12mm: N5,200
- Cement: N4,500
- Tile 60×120: N9,500/sqm
By December 2024, FX N1,700/$
- Iron 12mm: N11,500 – 121% increase
- Cement: N9,500 – 111% increase
- Tile 60×120: N22,000/sqm – 131% increase
Your N35M house now costs N58M to build. If you sold off-plan at N45M, you lost N13M per unit. On 10 units = N130M loss.
This is how developers abandon sites at 70% – money finished.
2. Project Abandonment – The 70% Disease
Nigeria has 56,000 abandoned projects – BPP data. Number 1 cause? FX-induced cost overrun.
Developer collects N20M from 10 off-takers = N200M. Budget was N300M total, he thought N100M balance from sales will complete.
FX jumps 40%. New cost N420M. He has N200M, needs N220M more, but buyers not paying again because they are also squeezed by FX. Site stops. Off-takers cry.
FX didn’t just increase cost. It broke trust.
3. Price Increase – Houses Become Unaffordable
FX up → Cost up → Developer increases price to survive.
2-bed in Ajah 2022: N25M 2-bed in Ajah 2024: N55M – 120% increase in 2 years. Salary increased 20%.
Result: Demand disappears. Only 5% of population can buy. Market shrinks to luxury only. Affordable housing dies.
4. Demand Shift – From Buying to Renting
When FX jumps, mortgage dies. Why?
Bank says: FX risky, increase interest from 20% to 28%. Monthly repayment for N20M mortgage moves from N380k to N520k. Salary didn’t move. Buyer fails mortgage test.
So buyer stays tenant. Tenants increase, but they can’t afford new rent. Landlord increases rent to cover dollar cost, tenant cannot pay. Void increases.
FX kills both buying and renting.
5. Material Substitution – Quality Drops
When FX jumps, developers panic and substitute:
- 12mm iron to 11.2mm “Chikoko” – building collapse risk
- 60×60 porcelain to 40×40 ceramic – cracks in 1 year
- 4mm aluminium to 2mm – flies off in storm
- Copper wire to aluminium-coated – fire risk
FX doesn’t just increase cost. If not managed, it reduces quality and kills people.
6. Delay – Time is Dollar
When FX jumps, importers hold goods expecting higher price. Tiles not in market. You pay 50% deposit to supplier, he delays 2 months hoping dollar will go up more so he can charge you more.
Project that should be 12 months becomes 20 months. Your interest on loan: N400M x 30% x 8 months extra = N80M extra interest because of FX delay.
7. Investor Flight – Diaspora and FDI Runs
Diaspora investor sent $20,000 in 2022 at N700 = N14M – could buy 60% of 2-bed off-plan.
Same $20,000 in 2024 at N1,600 = N32M – but 2-bed is now N55M, can only buy 58%. So his dollar buys almost same, but his confidence drops because price unstable. He waits.
Foreign fund: They invested at N500/$, now Naira is N1,650. Even if house price doubled in Naira, in dollars they lost. They don’t bring more dollars.
FX volatility scares long-term money more than high FX.
8. Valuation Confusion – Nobody Knows Real Price
Estate surveyor valued house N60M in January at N1,500/ . Replacement cost N75M. But market can’t pay N75M. So valuation is N60M, cost is N75M. Bank will not give loan because cost > value. Buyer will not buy because bank won’t fund.
Market freezes. Everyone waits.
PART 3: Impact on Real Estate Sub-Sectors – Not All Suffer Same
Lesson: The more dollar inside your building, the more FX will beat you.
PART 4: How Smart Developers Survive FX – 7 Strategies That Work
We cannot control FX. We can control exposure.
1. Reduce Dollar Content – From 70% to 40%
- Use local tiles – Royal, Goodwill – 60% local vs 100% imported
- Polished screed floor vs tiles in some areas
- Local timber doors vs imported HDF
- Aluminium roofing vs stone-coated imported
- Saving: 20-30% cost, same look if designed well.
2. Buy FX-Sensitive Materials Early – FX Hedging by Buying Once you have 30% deposit from off-takers, immediately buy iron, tiles, sanitary, aluminium, lift deposit. Store. You lock price. Don’t keep Naira in bank waiting for dollar to go up.
Rule: Naira in bank loses value daily. Tiles in store gains value daily.
3. Price in Dollars or FX Clause – Protect Margin
- For high-end: Price in dollars – 100k per unit, pay Naira equivalent at I&E rate on payment day. – For mid-market: Add FX clause – “Price valid at FX N1,600/. If FX moves beyond N1,850/$, price adjusts by 50% of FX move.”
- Clients accept if you explain early and transparently.
4. 3-Scenario Budgeting – No Single Budget
- Base: FX N1,650
- Tightening: FX N1,950 – Add 25% buffer
- Easing: FX N1,400
If project dies at Tightening, don’t start until you de-risk.
5. Use Local Supply Chain – Ogun Not China Granite from Abeokuta, sand from Ogun, cement from Ewekoro, blocks made on site. Transport 50km not 5,000km. You cut dollar in logistics.
6. Build Faster – Speed is FX Hedge 12-month project exposed to 12 months FX risk. 18-month exposed to 18 months. Use: Precast, better labour planning, buy materials upfront to build in 10 months not 16. Every month saved = 3% FX risk saved.
7. Sell to Dollar Earners – Change Customer When Naira weak, target: Diaspora, tech guys earning dollars, exporters, business people who price in dollars. They are not squeezed by FX, they benefit. Your Ajah house is cheaper for them when Naira falls.
Conclusion: FX is Not Your Enemy. FX Ignorance Is.
FX will never be stable in an import-dependent economy. It will always move.
The developer who budgets at one FX rate and prays is gambling, not building.
The developer who knows his project is 65% dollar, reduces to 45% dollar, buys early, prices with FX clause, and sells to dollar earners – he makes profit whether FX is N1,500 or N2,000.
In construction, profit is not made when you sell. Profit is protected when you manage FX.
Stop complaining about dollar. Start designing dollar out of your building, and designing dollar earners into your buyer list.
That is how you survive – and grow – when others abandon.
Your building is not Naira. It’s 70% Dollar. Treat it like Dollar, and you will never be surprised.
