BY OUR EDITORS
Nigerians have watched helplessly as the retail price of a bag of cement, irrespective of the brand, has skyrocketed from N1,000 in 2014 to between ₦3,450 and 4,000 this year.
During the 2014 price crash, Dangote Cement Plc. singlehandedly championed a major cut in the prices of the product when it announced a new price regime of N1,000 for the 32.5kg cement grade and N1,150 per bag for the higher 42.5kg grade.
Consequently, other local manufacturers of the essential product in the construction industry followed suit, which made the product more available and affordable. The development helped Nigerians, particularly those in low income cadre, to build residential houses in rural, semi-rural and urban centres, thereby reducing the acute accommodation crisis and the attendant huge rent in the country.
In its defence of the price crash then, Dangote Cement had said, “We recognise the need for a dramatic increase in the response to the huge infrastructure and housing deficit in the country, and one of the ways of addressing the issue is bringing the price of building materials down to much more affordable levels especially cement which is within our own control. This is part of our own contribution to the transformation agenda of the Goodluck Jonathan administration and the attainment of key milestones in the Millennium Development Goals (MDGs).”
The cement producers had sustained this lower price until last year when there was a drastic increase to N2,500 per bag in most parts of the country. The trend has since continued to the extent that by the end of the first quarter of 2021, a bag of cement rose to an all-time high of N4,000 per bag.
It is against this background that Nigerians heaved a sigh of relief when last week six senators moved a motion calling for federal government’s intervention to bring down the price of the product.
The sponsors of the motion, among others, called for more liberalisation of the cement industry to attract fresh investors in order to make the product available to Nigerians at a moderate price.
They also called on the executive arm of government to provide more industrial incentives and protections such as concessionary loans and larger tax incentives for new entrants in order to boost production and the setting up of a committee to investigate anti-competitive practices among local producers; direct the cement industries in Nigeria to increase their production and reduce the price of 50kg of cement to the barest minimum considering the fact that most of the materials for its production are sourced locally.
But to the rude shock of the citizens, that golden opportunity to retool the industry was lost as the Red Chamber shut down the motion under the guise that the industry was already liberalised for any serious new investors to stake their resources.
As a newspaper, we do not entirely agree with the Senate that the sector does not need fresh incentives. The Nigerian business environment has remained harsh and continued to remain so despite the efforts of the federal government to ease the challenges of doing business in Nigeria.
For instance, the country’s road network has remained bad, making cement producers to incur huge logistics cost in both the transportation of raw materials to their factories and distribution of finished products to end-users. Some of the cement producers have gone to the extent of taking up additional responsibility of constructing and maintaining roads leading to their sites and the adjoining highways, thereby incurring more operational costs.
Similarly, electricity supply to these factories has not improved. Most of the operators have resorted to setting up their own power plants because of the sensitive nature of their equipment and, in some cases, dams for the cooling of their machineries.
They are also confronted with excessive demands from their host communities.
To recoup their investment, these additional costs are passed to the consumers, who are already hard hit by poor earning capacity.
From the foregoing, as a newspaper which feels the pulse of the nation and her people, we advise the Senate to revisit the motion and make appropriate recommendations to the executive arm of government for timely intervention in the cement industry.
It is also our belief that the industry needs more incentives to keep the existing producers in business and attract new entrants. To do otherwise, in our thinking, will compound the country’s housing deficit currently put at 20 million houses.