Why cement prices are sky-high –BUA
By Maduka Nweke
Abdul Samad Rabiu, Chairman of BUA Cement, has highlighted the significant impact of middlemen on cement prices, attributing the high cost to their exploitation of consumers within the supply chain. Rabiu revealed this during the company’s 8th Annual General Meeting held recently in Abuja.
Despite BUA Cement’s effort to keep prices at N3,500 per bag in 2023, the company found that dealers were selling cement at inflated rates, between N7,000 and N8,000 per bag. BUA Cement had supplied over a million tonnes to dealers at the lower price, expecting the savings to be passed on to consumers, but this expectation was not met.
Rabiu emphasised that the company’s low-price policy could not be sustained due to the dealers’ substantial markups and broader economic factors such as the naira’s devaluation and the removal of fuel subsidies. These issues, coupled with market dynamics, forced BUA Cement to abandon its initial pricing strategy. “We wanted to maintain the price at N3,500, but due to the challenges we faced, including the naira’s devaluation and the fuel subsidy removal, and the dealers’ practices, we could not sustain this policy. The dealers exploited the situation, making significant profits at the expense of the end consumers,” Rabiu explained.
The surge in cement prices has had a cascading effect on housing costs in Nigeria. In May 2023, the average price of cement was N4,300 per bag, which skyrocketed to between N7,500 and N8,000 per bag by May this year, marking an increase of 74.42% to 86.05%. This escalation in costs has sparked concerns among experts that more Nigerians may be forced into substandard living conditions as rents have doubled over the past four years. Property owners with incomplete buildings may be tempted to occupy them without necessary amenities to avoid rising rental fees, further exacerbating the housing crisis.
Adekunle Ebenezer, a quantity surveyor at Anchor University, Lagos, noted that building materials account for 50-65% of construction costs. As prices rise, developers are compelled to transfer these costs to buyers. “The increase in building material costs inevitably raises construction expenses, leading to higher rental and sales prices as investors seek to recover their capital swiftly,” Ebenezer stated. He also raised concerns about the growing stock of unsustainable buildings and called for a more comprehensive approach to material selection that considers environmental and social factors, not just economic ones.
Sadiq Abubakar, President of the Council for the Regulation of Engineering in Nigeria, linked the frequent building collapses in the country to the arbitrary increases in cement prices. Speaking at a House of Representatives investigative hearing in May, Abubakar emphasized that the rising cement prices have a direct connection to building standards and the incidence of collapses. “An increase in cement prices is a significant factor contributing to building collapses. It is essential to link these price hikes to building standards and the increasing frequency of collapses,” Abubakar concluded.
