AFRICA: NIGERIA: High Cost Of Cement

CEMENT has been expensive for more than three years. The recent interests in the cost of cement is just the same type of fleeting attention that enduring challenges receive from our leaders. Distributors, bad roads, high cost of electricity, taxes, multiple levies, insufficient supply, and panic buying are the combined causes of persistent high price of cement.

Does anyone need any meetings to know these? Will this meeting handle the challenges within the 30 days during which President Goodluck Jonathan has ordered a price crash? Does it mean that the manufacturers are deliberately hiking prices?

Cement is an essential commodity for the sustenance of the economy, especially a growing one where massive constructions are going on simultaneously in many parts of the country. The housing demands cannot be met because construction costs (and higher cost of access to land) make it more difficult.

High demand for cement should be good for the economy. It should mean more jobs created at the production plants with the multiplier effects for jobs in logistics, mining and other supporting industries for cement production. High cement demand is an indication of high construction activities, which also create jobs.

None of these is happening because the cement debacle is one that government refused to tackle, almost 40 years after the ports in Lagos were jammed under what was called the cement armada. Then the oil boom saw a surge in construction and a rise on demand for cement. Imported cement filled every available space at the ports. The decongestion of the ports was another major scandal of that era.

Even today, the joint capacity of all the ports in Nigeria, if it was to be used solely for cement importation, will still not meet the national demand estimated at more than 12 million metric tonnes. The estimates may also suffer from the same under-rating of the needs for telephones on the eve of launching of mobile telephones in Nigeria.

Based on NITEL’s less than 500,000 connected lines, little chance was given of Nigerians buying more than a few million lines. The million mark was exceeded in months and the telecommunication firms had to restrain sales to save their infrastructure that never anticipated the surge in demand.

If cement is available at a more affordable price, many construction projects (especially private) that have been postponed would be resurrected. The demand could still go above the estimates.

Prices have shut to N2,500 per bag in some places from the December price of N1,500. High cost of fuel, particularly diesel, was also identified as a big factor in the commodity’s price. The vast distances from production points, the bad roads and 35 per cent import duties are mentioned as factors in the high costs of cement.

Investments of more than $10 billion in a decade have increased local capacity, but the deficit remains high, in the range of about three metric tonnes per annum, which some are suggesting could be addressed through importation.

Government should pay more attention to infrastructure, its bad state is damaging this economy. The issues around cement are mostly about infrastructure.

Nobody required investing precious presidential time meeting on cost of cement.

A long term addressing of these challenges will stop further embarrassing presidential ultimatum to cement manufacturers and similar groups.