...say knee jerk approach to price control counterproductive
John Alechenu, Abuja
The Nigerian Institute of Quality Surveyors has implored the Federal Government to take proactive measures to halt what it called the current uncontrollable surge in general price levels of goods and services especially in the construction industry.
National President of the Institute, QS Kene Nzekwe, said this at a press conference in Abuja, on Thursday.
He explained that the price of a 50kg bag of cement rose from N4,500 to between N12,000-N13,000, an increase of about 100 to 150 percent from January- February, 2024, and the rise in the price of reinforced steel rods from around N590,000-N650,000 per ton as of January 2024, to N1,200,000-N1,400,000 in February, 2024, both have far reaching adverse effect's on the economy.
The NIQS President noted government will do well by encouraging the construction industry to thrive through the implementation of deliberate policies to encourage the use of local alternatives to imported goods considering the vital role it plays in the economy.
Nzekwe said, "The knee-jerk reaction of persuading manufacturers to bring down the prices or face dire consequences at this stage may be counterproductive.
"Our recommendation will be for the government to sustain engagement with local construction material manufacturers to understand and address their challenges.
"Some of the challenges highlighted by the local manufacturers include exchange rate volatility which had seen our currency depreciate by about 300 percent in a few months thereby affecting the imported components of their manufacturing like spare parts , mixing explosives and import tarried which is indexed in US Dollars.
The President equally said, "While addressing the challenges faced by the local manufacturers, it is also important that the government look at the structure of the building material manufacturing industries, especially cement manufacturing.
"Oligopolies and cartels in the construction materials manufacturing industry must be discouraged.
"Perfect competition should be the aim, aligning local production prices with international standards.
"The government should incentive market entry for new producers into the construction material production space by lowering licensing requirements.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
"This is in a bid to boost competition and drive down prices of basic construction materials like cement. Strengthening the Federal Competition and Consumer Protection Commission (FCCPC) is vital to guard against antitrust tendencies, especially in the construction material manufacturing sector."
The institute also charged the federal government to take urgent steps to stabilize the exchange rate while implementing a friendly tariff regime by adopting a temporary measure of lifting restrictions on importation of some construction materials which has hitherto to be restricted.
It reiterated the need for the President to take steps to monitor and enforce provisions of Executive Order 5 for the promotion of local content in contract planning and execution of projects.
This, according to the institute, will ensure that the desired increase in the quantum of value created in the Nigerian economy through increased Nigerian content in public procurement is realized.
The high overheads and other attendant costs charged to contracts in favour of expatriate staff, which is usually charged as a percentage of the total contract sum is discarded, giving rise to more reasonable construction costs.
