21 March 2018

Tanzania: Govt Explains Spiralling Building Material Prices

Dar es Salaam — The government has clarified that the rising cost of building materials has partly been caused by an increase in steel prices in the global market.

This was revealed yesterday by Industry, Trade and Investment minister Charles Mwijage during an interview with a local television station.

Mr Mwijage said the cost of building materials has not only increased in Tanzania but globally.

"We import raw materials to manufacture items such as nails, iron bars and gypsum. Prices of these raw materials have skyrocketed in the world market, and that is why building material prices in the country have risen too," he said.

Mr Mwijage further noted that what happens when steel prices rise is similar to what happens when prices of crude oil increase in the global market.

"The cost of raw materials determines the actual cost of finished products. When prices of raw materials increase, the cost of finished products goes up too."

He further explained that the increase in cement prices was partly caused by a breakdown at the Dangote factory in Mtwara.

Mr Mwijage added that the breakdown would be fixed within six to seven days.

"Dangote is a game changer. They use the market penetration strategy. The approach is to manufacture more and distribute large quantities of cement countrywide. This is in contrast to other companies, which opt to capitalise on shortages to increase prices," he said.

The Dangote plant was commissioned in December 2015 and it is the largest cement factory in Tanzania. The plant is capable of producing large amounts of high-quality 32.5 and 42.5 grade cement to meet local market needs at competitive prices, as well as surrounding export markets.

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