Vanguard
3 October 2008
Cement is a major input for housing and many other forms of construction. Homes, factories, hospitals, schools and even roads and airports among others depend on a country being able to secure continuous supplies of cement at fair prices.
Competitiveness of the nation's manufacturing sector also partly depends on the same variables.
To obtain cement at sustainable prices several countries have sought, achieved self-sufficiency in cement production. A few lucky others are net exporters of cement. Among the majority of nations that are net importers of the commodity, the import duty is kept reasonably low resulting in fairly low domestic prices, which in turn encourage construction.
Nigeria presents a paradox. The nation can be self-sufficient and even a net exporter of cement, but it is still importing. Expanding cement production by encouraging more investment will reduce its price and speed up housing and development generally; yet installed capacity does not meet up to 20% of our requirements. Import could bridge the gap and help bring down the prevailing prices. Government however is in a quandary regarding cement policy.
A few months ago, it announced that licence to import bulk cement would be issued to those with cement plants in Nigeria in a bid to lesser the price. The producers are reluctant to take up the offer because it could get out of hand and result in another cement armada driving prices below levels the local producers want. After a while, that policy was reversed and then re-introduced when the outcry from the public was unbearable.
Now the idea of allowing bagged cement is being muted. As far as the local producers are concerned, allowing bagged cement is even more threatening than bulk cement importation. There is certainly an uncomfortable conflict of interests between producers and consumers, which must be resolved quickly. Doing nothing is not an option because it has dire consequences for the nation's attempt at reaching the Millennium Development Goals, MDGs, in many respects.
We believe government should attempt to find a middle course between discouraging domestic investment by opening the gates to unlimited imports in whatever form because that will mean that the vast potentials we have might never be developed to make Nigeria self-sufficient in the commodity not to talk of becoming a net exporter. At the same time, cost of construction needs to reduce considerably if Nigerians are to benefit from better infrastructure.
Given a very low installed capacity in relation to our needs, we think government should allow imports but employ the duty regime to allow domestic producers room to dispose of their products at a fairly good margin to encourage expansion of domestic production capacities. At the same time, a deadline must be set by which domestic producers would be expected to compete with imports. This serves the interests of both parties to some extent and provides hope that the country's capabilities in cement production might eventually be realised.
The present situation of no policy simply creates chaos.
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