Faridah Kulabako
20 August 2009
Cement manufactured in East African countries may soon be pushed out of the market if regulators don't control the rate at which low-priced imported cement is coming into the region.
In a joint press release issued last week, cement manufacturers called on governments to review trade policies in accordance with the global slowdown that has affected industries. This will help protect local industries, which are on the verge of collapse following an increase in imported cheap cement into the region.
They said foreign brands threaten the survival of local industries, which if not dealt with immediately, would cause market distortions.
"We have a choice of either helping our industries to become competitive or opening the markets and destroying what has taken many years to build," said Mr David Njoroge, Hima Cement general manager.
Mr Njoroge said though the cement imports in Uganda were still at a smaller scale, the situation was grim in Tanzania where two of companies have suspended production.
They attributed the high cost of local brands to high energy costs, poor road and rail infrastructure, low protectionist tax regimes and lack of government subsidies that make it difficult for the local industry to compete favourably at a global level.
Power costs $13 cents per kilowatt per hour in Kenya, $12 (Shs240) in Uganda, $10 in Tanzania, $3 in Egypt and China.
When contacted, the State Minister for Trade Mr Gaggawala Wambuzi said the government was not ready to invest in an industry that has failed to produce enough cement to meet the current demand and which was at the verge of collapsing.
"The government is going to license two more manufacturers in the country," said Mr Wanbuzi. Unlike foreign producers who were given large fiscal stimulus packages by their governments to reduce the cost of production, local producers said their countries didn't give any subsidy hampering the competitiveness of the industry.
"East Africa has become a favourite dumping ground for cheaply produced cement because of lower ocean and freight rates due to the global meltdown," cement producers said in a statement adding; "imported cement is not subjected to the required taxation and or do not meet the required national standards."
Uganda Manufacturers Association Executive Director Gideon Baddagawa said the reduction of the common external tariff duty from 35 to 25 per cent was a lee way for imported cement to flood the market. "Currently, there is a new brand on the market, which sells at Shs28, 500 as opposed to the local ones that sell at Shs30,000 above," said Mr Baddagawa.
Mr Njoroge warned that if the situation continues, the government should expect Ugandan producers to suspend production. Imported cement comes from China, Egypt, India and Thailand.
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