KENYA: Balala Accuses Cement Firms of Exploitation

Mining Cabinet Secretary Najib Balala has accused some cement companies in the country of exaggerating prices following the introduction of a Sh140 levy per tonne of cement.

Balala argues that the firms were supposed to increase the prices by Sh7 for 50 kilogram bag but some have gone up to Sh20 higher causing what he termed as anxiety in the growing manufacturing sector.

The companies had an agreement with the ministry that the levy should not lead to unnecessary price hike and distort the market.

"We had several meetings in my office and agreed that the increase should not go beyond Sh7. But they have actually betrayed what we had in these discussions. I didn't expect them to go back on their word," he complained.

The CS terms the extra increase as exploitation adding that most Kenyans tend to assume that cost of goods must go up when there is such a move.

"They promised there will be no this king of increase, but now they are using this to incite the people of Kenya in the name of cost of living."

Competition following entries of new players in the market including National Cement, Savannah Cement and Mombasa Cement, has led to continued drop in cement prices in Nairobi to Sh640 a bag in Nairobi from a peak of Sh740 in 2010. However prices outside Nairobi remain higher due to transportation costs.

The major cement companies include Bamburi Cement, Athi River Mining and East African Portland Cement Company (EAPCC).

"If we want to deal with government, let's be honest. It is a partnership that we value and which must be respected with honesty. But if it is going be like this, then we are not in the business of playing games. We have to do the right thing for our people," Balala said.

The Cabinet Secretary in a gazette notice signed on December 18 said the cement companies will be required to give the levy for the finished product. He at the same time cancelled a previous notice which had directed the informed the firms that they would be charged a levy of percent of turnover.

However Kenya's prices are still under the principle of supply and demand which makes it tricky for the ministry to control the cement prices hence leaving Kenyans with the burden.