In a country challenged by housing crisis, the subsisting high cost of cement is a cause for grave concern: cement accounts for over 40 per cent of the budget of housing construction.
We recall that before the cement import licences granted by the federal government expired on October 1, 2007, cement prices had stabilised at about N1, 250 per bag of 50kg. Since then, however, prices have oscillated between N1,350 and N2,100, depending on location and the cement brand.
It was estimated that Nigeria needed 8 million tonnes of cement in 2001. This figure jumped to 11 million tonnes in 2006. Currently, the country requires some 18 million metric tonnes every year. Significantly, all the five companies manufacturing cement locally have not been able to produce up to 80 per cent of this requirement consistently.
It is against this background that we find the "war" over alleged cement glut between the Dangote Cement Plc and Ibeto Cement Company Limited curious and unnecessary. According to the management of Dangote Cement, who are alleging glut in the cement market and squarely accusing Ibeto Cement Company of being the cause, it recently closed its Gboko plant in Benue State as a result.
In the words of the group head, corporate communication of Dangote Group, Anthony Chiejina, "With the dumping of subsidised imported cement in the south-eastern market, there is no way our Gboko cement plant can survive. In fact, members of staff have been put on forced leave pending when the situation improves." But the management of Ibeto Cement Company debunked Dangote's position.
In a public statement signed by its executive director, strategy and public affairs, Dr. Ben Aghazu, Ibeto Cement accused Dangote Group of insincerity and monopolistic tendencies: "Dangote Group wants Ibeto Cement Company out of the market so they can dominate the south-east zone also and thus complete their monopolistic stranglehold on the entire cement market in Nigeria."
Sometime last year, President Goodluck Jonathan, unhappy with the high cement price, directed cement manufacturers to bring down the prices within 30 days. This was not met. For the manufacturers, there has been no shortage of excuses. Nigerians deserve better.
We believe that a key challenge for government is the imperative to break a clear monopoly in the cement industry. Why Africa's most populous country should have only five companies producing and/or importing cement remains a puzzle. Worse, among the five, one or two are clearly favoured by government.
This has actually impeded genuine national development and should stop. If there are laws against monopolies, they should be enforced. However, if there are no laws to aid the government in breaking monopolies, then, the National Assembly should rise to the occasion and do its duty. Allowing monopolies to operate in any sector of the economy is not in the national interest.
The accusations of cement glut being bandied flies in the face of basic economics. A glut results when a market is excessively supplied with a particular product. The first evidence of such a situation is the drastic reduction in the price of the product, but this has not been the case of cement. The current cost of cement squarely contradicts the glut scenario being painted by Dangote Group. In this connection, the allegations against Ibeto Cement Company Limited are clearly unsustainable.
Since cement is a strategic commodity critical to the nation's economic security and infrastructure transformation, it should be made readily available in every part of the country and at affordable cost. This is the main challenge before the government and the key players in the sector.
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I couldn't agree more with this writer, A nation with convoluted economic strategy will never grow any stronger than the wisdom of her planner's know how. I wrote a piece on the question of Nigeria's patronising economic strategy and the culture of subsidy at the wrong places. From the first day of this nations independence, our economy have been driven by factors like Religion , Ethnic patronage, Political brinkmanship instead of economic of free market or supply and demand. The origin of political instability have it's troubling start from culture of bending the criteria to favour and keep unsustainable business, even the overnight ones set up for insidious reason at all cost and to support the evil mind behind it . The original national program to support part of the country with unequal education and Fiscal structures catch up, was quickly transformed to undermine the benign national purpose for which our earlier leaders had intended. Those problems that led to big-time destruction of our nationhood is still the background to our structural government till this day . The resistance have not changed an iota and you wonder why that distortion is not being addressed right on. If you're honestly looking for answer to the basic reason no regime work to the rhythm of national set goals and objectivity, Military or civilian , find it from this explanation. I am often ashamed when the entire universe refer in many political and private conversations about Nigeria as the giant of Africa and wonder why we're not helping at home . In my last article , I made reference to the past experience under IBB when Enugu Coal Mine,a Nigeria energy production sector you'll expect to be given preference, was left out to import same commodity for the purpose of making out contract to help prop up Northern transporter whose capacity to compete lacked substance. But not only that , this transporter had not enough trucks to do this contract and was given the privilege to import more used trucks from Germany (I suspect because the convoy was all same German product) of used trucks. If it is proven to be true that one single individual importer was given the monopoly to import essential commodity for the entire citizen of 165 million population in Nigeria in modern economy, what rational economic practise will this look like , why must all citizens of Nigeria be made available for gauging by single market at the whims of importer with active connivance of Federal authority? Any incompetent trader supported with such brutal sell off of the citizens will automatically become an overnight billionaire just like NNPC throws out billionaires from economics of loot and plunder that easy. No government with such national profile will survive the wrought of it's citizens . Nigeria's economic practise is functionally primitive and amount to a return to the age of slavery. Dangota and his co-business monopolists have the necessary tool and can afford to hire Managers with skill to enforce his will on the market by studying the business practise of Ibeto and similar importers he think are manipulating the market .If he wants Federal government of frequent intervention to help as usual, his company options include to do so by presenting result to convince Federal regulators of culpable dumping with suppliers in his competitors favour .The era of using government to extort consumers and support inefficient local industry wont be helped by indirectly taxing consumers or encouragement of additional billionaire with peoples blood. Deal with competition or shut up, that is the business norm in every capitalist enterprise .