AFRICA: NAMIBIA: Cement Price Anger

Complaints by consumers are flooding in over the price of cement, with dissatisfaction of price differences between competing cement brands in Namibia.

The anger is also directed at the average price for inland areas, which is said to have taken a leap from just under N$70 per 50-kilogramme bag of cement to nearly N$90 per bag.

Anecdotes by furious consumers show how the public is partly directing its anger to Government for an explanation, since it was "the government's promise that cement would be cheaper with the opening of the country's own cement plant at Otavi".

Yet, unlike with the first wave of disappointment by building material retailers two months ago, consumers' anger is directed at the entire cement market.

Namibia has about five cement companies that import cement products from China, Portugal, Brazil, as well as from South African cement manufacturer, AfriSam, which was the market leader before Ohorongo opened its doors at Otavi. The opening of the country' own cement company, Ohorongo Cement, induced the market with high expectations of lower cement prices and doing away with uncompetitive retail and distribution practices on the market.

Namibia Chamber of Commerce and Industry northern branch, where most of the complaints emanate from, says it is yet to pick up such consumer complaints, since addressing the retailers' concerns last month. The chairperson for the northern chamber, Thomas Indji, did nevertheless promise to look into the matter.

Complaints received thus far indicate that the price of cement has jumped from just under N$70 per bag to nearly N$90 per bag. Compounding the anger is the absence of a clear price difference between competing cement brands, something that has again prompted market speculation on the real reason for the closure of AfriSam office in the country.

AfriSam Namibia started winding up its Namibian operations in April, eventually closing is offices this month, which fired off market speculation of an unofficial agreement with Ohorongo Cement, similar to a proposed merger that the Namibian Competition Commission rejected on grounds of possible trade restrictions.

Both companies dismissed such speculation as unfounded, with the Chief Executive Officer for AfriSam South Africa, Dr Stephan Olivier, telling New Era that the closure was because "it makes economic sense to service customers out of our Johannesburg office and to quote prices that include transport costs".

AfriSam says it conducted a comprehensive commercial review of the Namibian market potential when Ohorongo Cement went operational and the economic reality was that AfriSam could not afford the fixed costs of a local presence in the country.

Likewise, Ohorongo Cement said it has a strict policy of being the cheapest above its competitors, hence saying joining forces with its competitors was out.

Cementing the market suspicion is that former AfriSam sales and marketing department staff members have migrated to the Ohorongo Cement sales and marketing department. Analysts contend that this is precisely what the proposed merger detailed, and which the competition commission rejected.

It has not been an easy start for Ohorongo Cement meeting outright objections from northern retailers, because of its initial approach to clients using their own transport. The issue was eventually resolved amicably, with the intervention of the Namibia Chamber of Commerce and Industry on behalf of retailers.