THE Federal Government on recently convened a 'Stakeholders' meeting in Abuja to address the soaring price of cement in the country.
In attendance was the Minister of State for Commerce and Industry, Chief Mrs. Josephine Tapgun and representatives of the Cement Manufacturers Association of Nigeria (CMAN). In this report, our correspondent, Obinna Nwachukwu analysis the situation on ground and offers solutions to the lingering problem
Apparently worried by the current price of cement which sells as high as N2400 per bag in some cities in Nigeria, the Minister at the meeting 'expressed surprise' over the continuous rise in the price of cement across the country, adding that the increase was having negative effect on the construction industry.
According to Mrs. Tapgun: "There has been public outcry regarding the recent increase in the price of cement, and as a Ministry, we also need to express our concerns. We had thought that things were going on fine in the cement industry, but we are alarmed that in the last three weeks, there have been continuous rise in the price and government feels it should not be so.
We are ready to partner local cement manufacturers to ensure that Nigeria achieves self-sufficiency in cement production". The Minister, therefore, called on cement stakeholders to come up with suggestions on how to immediately reduce the present price of cement. This clarion call informs the writing of this paper.
State of the cement industry
The concern of the Minister is indeed the concern of every body given the place cement occupies in the nation's construction industry. But the government seems to have forgotten quickly the genesis of the present crisis.
As a background information, the Federal Government in June 2001 directed cement producers to embark on what it called "backward integration programme", which meant investing in the local manufacturing of the essential product. Cement producers were given 18 months to complete the process after which government said it would ban cement importation.
The 18 months period was not only short but the programme itself was devoid of wide-spread consultation because government failed to carry along all stakeholders. Even the Inter-Ministerial Committee that was later set up to deliberate and advise the government on cement self-sufficiency was ineffective because of insincerity on the part of some of the members and the pursuance of parochial and self interest rather than national interest.
The result of this has been constant postponement of the deadline and this will continue until things are done aright. The mismanagement of transition period from importation to self-sufficiency is a major cause of the present problem. The second issue is the oligopolistic market structure that is stifling competition in the sector.
Based on revised government's projections, Nigeria is expected to achieve self-sufficiency in cement production and become an exporter of the commodity by 2013 when local production is expected to reach 22 million metric tones.
Last year's consumption figure was 18 million metric tones out of which supply from local manufacturers was about 10.5million MT representing 65 per cent of total cement supply that year.
I used the word 'revised' because the issue of meeting equilibrium point between demand and supply of cement in Nigeria has always been a mirage. On several occasions, government had come out with lofty ideas on how to make cement available and affordable. However there remains lack of proper planning, inadequate consultations, absence of quality and sincere input from key stakeholders and policy somersault.
Given the peculiar nature of Nigerian economy as a developing nation coupled with the ever fluctuating Gross Domestic Product (GDP) growth rate, it would take a long time before we strike a balance. The truth is that even the government cannot claim to have accurate statistics on annual rate of consumption of cement in Nigeria.
For instance, houses are regularly built; a poor man today may hit it big tomorrow and decide to build himself a mansion at home and in the city; a contractor may next month win housing or road construction contract; a new Governor or President may as his priority programme embark on mass housing scheme as against what his predecessor did.
There are many more instances. For example, the quantity of cement being used in the current massive construction and rehabilitation of roads in Abuja, Akwa Ibom, Rivers and Lagos States to mention but a few wouldn't have been captured by statisticians four years ago. As the economy improves, so do all sectors of the economy, the building/construction industry inclusive.
Right from 1957 when local production of cement commenced at the premier cement factory, Nigercem, Nkalagu, local production has never been able to meet demand even in the mid-80s when demand for cement was declining.
Local production remained at less than 50 per cent of total installed capacity, which was largely concentrated in just two plants. Of the annual demand estimated at 18-million tonnes, local production could only supply between 6 and 6.5 million tonnes of cement yearly.
However as of today, inspite of various good intentions of the Federal Government, the price of cement has continued to increase. There is no need saying the fact that the cement industry in many ways contribute to economic growth.This informed the Backward Integration Policy of Government in 2001 wherein importers were encouraged to open local plants aimed at bridging the deficit of 11.5 million tonnes in the supply of cement, and temporarily reduce price which was considered high at that time - N800 per bag.
As a major input provider, it provides linkages to other sectors of the economy, especially building and construction. These potentials are yet to be fully tapped. Official statistics shows that consumption of Cement in Nigeria is currently one of the lowest in the world.
It estimates consumption at around 91kg per capita, well below the global average of 450kg per capita and those of other African countries such as South Africa, Egypt, Ghana and Morocco.
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