AFRICA: UGANDA:

cement prices have dropped by 18% in the past one year. The East Africancement Producers Association (EACPA) attributes the decline to an increase in local cement production. 

Recent dealer price trends in Kampala show that the price of cement fell from sh27,090 for a 50kg bag in August last year, to sh22,200 in October this year. The price includes 18% value-added tax and the sh500 per bag excise duty. 

The earlier high prices of cement were largely attributed to huge demand and inconsistent supply coupled with huge production costs, especially for electricity, heavy fuel and transport. 

According to David Njoroge, the EACPA chairperson, the steady fall in priceswas due to the heavy investment by local cement firms over the period to boost production. 

“Last July, for example, Hima cement established a $120m factory in Kasese, increasing production capacity from 350,000 tonnes to 850,000. Tororo cementis also undertaking a $50m investment project to enhance production. Its completion will optimistically force prices downwards.” 

Njoroge warned that cement prices would increase if there are no efforts to support local production or promote local competition. 

Apart from boosting the local construction sector, increased investments in the local cement industry will have a hand in reducing the country’s unemployment rates. 

However, amidst the excitement created by the slumping prices, manufacturers are concerned about the cheap cement imports from Asia where production is subsidised. 

Njoroge revealed that the comparative production costs in Asia and the Middle East were much lower than in Uganda.The cost of transport in Uganda is between 12 and 15 US cents per kilometre per tonne compared to 3 US cents in China and much of Asia. 

Electricity costs $90 per megawatt per hour (MW/h) in Uganda compared to $30 per MW/h in much of Asia. It is even lower in the Middle East, according to Njoroge. 

“This is a serious stumbling block as we try to compete with products from these regions that have, in addition, enjoyed a wide range of export incentives since the global economic crisis begun,” says the chairperson. 

Faced with a similar situation, Nigeria recently imposed a 35% tax on importedcement in the spirit of safeguarding the local industry from undue competition and accelerating the growth of local capacities as well as provide possibilities for eventual export of cement to other African states and beyond. 

Local manufacturers say it is about time that similar measures are taken in Uganda and East Africa to enable a level playing ground and to safeguard the local industry which recently faced collapse due to influx of cheap cement from Pakistan, Turkey and China . 

In 2008 EAC governments reduced the Common External Tariff (CET) oncement from 40% to 25% citing production gaps brought about by unforeseen factory breakdowns for some local producers. 

Today, local manufacturers under the auspices of EACPA confirm that at 10 million tons, their capacity now exceeds demand in the region by 3 million tons and the EAC governments need now to move to guard the local industry from competing with subsidised imports. 

Recently the manufacturers petitioned government to reinstate the CET at 35 percent or $50 per ton, whichever is higher, in order to level the playing field and protect the region from negative effects of dumping. 

They argued that Uganda would lose sh131bn and a further sh80b to sh100b in tax revenue if the industry collapsed.