1 January 2013

Nigeria: Cement Import - Manufacturers Seek FG's Intervention

Unless the federal government yields to calls by cement manufacturers to come to their aid, the cement manufacturing industry may soon follow the way of the textile industry that once employed hundreds of thousands of people but has become moribund today,

Chairman of the Cement Manufacturers Association of Nigeria (CMAN), Joseph Makoju,has warned .

Makojo regretted that the development was happening at an early stage in the country's investment circle when investors were yet to recoup significant part of their investments.

"It has damaging multiplier effects on the economy in terms of job loss and decline in all other economic activities that are dependent on the cement industry," he explained.

Majoko, who also doubles as Special Adviser toAlhaji Aliko Dangote, President/Chief Executive of Dangote Group urged the federal government to restrain cement importation by imposing reasonable tariffs so as to encourage local investors who have in the past few years invested heavily in the manufacturing of products that were mainly imported in the past.

He also advised that government should make efforts to ensure that there were good roads so that haulage cost could be reduced, thus bringingdown the overall cost of cement.

He said the move would enable more people access cement for their building purposes. Haulage, he said, accounts for between 20 and 25 percent of the open market price of cement.

Makojo further appealed to the government to commence the use of cement in road construction to enable the industries produce at full installed capacity.

He recalled that the cement industry came from a comatose status as at 2002, when local production was a paltry 1.9 million tons.

According to him, following the backward integration policy of government latched onto by local manufacturers, the total cement production rose to 18.5 million tons as at 2012, with another 12 million tons expected from the expansion and new plants currently under construction across the nation by manufacturers.

"Yet the 18.5 million tons is representing just 65 per cent of the present total installed capacity of the industry," he said.

On why the government would need to intervene, he revealed that between 2002 and May 2012, a total of $6 billion investment was made by the local manufacturers, while the on-going expansion and new plants was estimated to cost another $3.5 billion.

The chairman stressed that as a result of the continuous rapid growth, the nation no longer requires cement imports as local demand was being effectively met and even surpassed.

"However, with continuous importation of the product into the country as at today, most local cement plants have huge inventory of unsold cement and clinker, signifying the attainment of self-sufficiency," said Makoju.

He said Dangote alone has inventory of 950,000 tons of cement and clinkers like other manufacturers which could be easily verified.

The importation of cement to the detriment of the economy according to him has become very attractive because it comes with a paltry duty of 20 per cent and levy of 15 per cent and clinker at 10 per cent, thus making the landing cost of imported cement to be very cheap at $35 that is just over N5, 000 per ton.

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