‘High cost of cement, threat to Nigeria economy’

By Maduka Nweke

Concerned Nigerians have raised the alarm on the effect of continuous cement price increase in the country. They believe that the situation is worsened by the monopoly granted by government to some preferred companies.

Some of them likened the dominance of three large firms in Nigeria’s cement industry to the same marginalization and corruption that have bedeviled the country.

This criticism is coming amid price rises which they said impedes construction which is critical to economic recovery. They, therefore, call the concerned authorities to loose the licensing rules that made it possible to only three companies to manufacture cement in order to attract new entrants.

According to one of the respondents, Mrs. Angel Ibrahim, Nigeria has a total cement production capacity of 47.8 million tonnes and annual demand for around 20.7 million tonnes, but cement prices are some 240 per cent above the global average. She said this is a serious dampener on Africa’s largest economy where a tonne sells for up to $135 in Nigeria based on industry data.

Some Lawmakers recently challenged cement price hikes since 2016 given the dominance of Dangote Cement (DANGCEM.LG), which has 60.6 per cent market share. Lafarge Africa (WAPCO.LG) that accounts for 21.8 per cent while BUA Cement (BUACEMENT.LG) has 17.6 per cent.

In a motion adopted on the floor of the (Red Chamber) Senate, lawmakers called for a relaxation of licensing restrictions to create the competition needed to drive down prices.

They warned of the negative impact of the high prices of the commodity on the Nigerian economy, which emerged from recession in the 2020 fourth quarter but is grappling with double-digit inflation and a shrinking labour market amid mounting armed violence.

“The recent increase in the price of cement slowed down the amount of construction work being embarked upon and almost collapsed the procurement plan of the government in 2020,” the motion said.

In his opinion, Mr. Olawele Ayilara, a property developer said the construction industry in the country is grappling with the high cost of cement which is crippling the economic activities in the country.

“Cement firms raised prices during Nigeria’s 2016 recession to counter low sales volumes, and the country shut land borders in 2019 for more than a year to curb smuggling, damaging exports. Firms raised prices to make up for revenue losses. If the status quo persists, the negative consequences of high prices on the economy will outweigh the benefits of producing cement locally,” he said.