AFRICA: Low Import Duty To Hit Cement Producers In East Africa

Local producers of cement are set to bear the brunt of the East African ministers’ decision to retain a lower duty on importation of the commodity.

The decision by the ministers to remove cement from the list of “sensitive products” means partner states would continue paying an import duty of 25 percent on Portland Cement and promises low priced for consumers.

“It has been our prayer that the import duty is increased to at least 35 percent so that we’re cushioned from the imports,” local media outfit, Business Daily quoted Narendra Raval, chairman of Devki Group as saying.

Raval, whose company produces the National Cement brand noted that local producers of the commodity expected to be better promoted before cheap imports are allowed into the market.

The East African Community (EAC) has a sensitive list of products covered by the EAC Customs Union Protocol, which exposed cement to a 55 percent tariff to be reduced by five percent a year from 2005.

The sensitive status was however removed in 2008 following cement shortages occasioned by the construction of stadiums in preparation for South Africa’s hosting of the 2010 World Cup. The import duty was then reduced to 25 percent from 40 percent and has remained so.

Local producers lament that the cement import tariff reduction has made cheap cement from China, India and Pakistan flood the market, with Business Daily quoting market insiders as saying cement from those countries sold at 50 percent to 60 percent below the domestic market price.

With one of the main objectives of the EAC being to sustain the expansion and integration of economic activities within the Community, the local producers are wondering if the bloc is living up to its objectives.

While the decision of the EAC to maintain the 25 percent tariff may seem best to the bloc at the moment, the ministers are expected to address the tariff issue once its overall effect on the market is noticed.