Cement price in Nigeria is as erratic as our power situation. It changes at a moment’s notice. As a matter of fact, cement is one of just a handful of consumer products in Nigeria that its prices changes indiscriminately without even a pin-point cause.
The effect this unstable market behavior poses for the ability of an average Nigerian to own a home is what we have decided to highlight with this article.
If there is a human need as basic as food and clothing, then that human need should be housing. Housing is a complex package of goods services which include basic shelter living space, access to amenities, access to work, social services and personal security.
It is therefore sad that most Nigerians don’t have access to affordable housing, it is also disheartening that the factors for sustainable housing development hangs by a thread, amid the economic brouhaha our country has been thrown into in recent times.
What Is Cement?
Cement is a finely ground powder that, when mixed with water, set to a hard mass. Cement may be used alone but, the normal use is in mortar concrete in which cement is mixed with inert materials known as aggregate. Mortar is composed of a thick mixture of water, and cement.
To The Crux Of The Matter
It is a known fact that Nigeria’s dwindling economy is highly reliant on cement for the development of basic infrastructures such as roads, water supply, hospitals, schools, houses and ports. Hence, any increase in cement price takes full toll on the building and construction industry.
The recent hike in cement price has already triggered a ripple effect in the open market, with prices going up by about 44 per cent in few days.
According to a report in TheGuardian, investigations revealed that operators under the Cement Manufacturers Association of Nigeria (CMAN) have raised prices of brands by N600 per bag in factories, including additional N100 cost for haulage.
As of present, the retail price of cement in Nigeria is ₦2,550 – ₦2,800 per bag, depending on brand, location, and other factors. And the wholesale price (600 bags) is ₦1,470,000 to ₦1,510,000, depending on the manufacturer.
Members of the CMAN include Dangote Cement Plc, which is emerging as a market leader and has factories in Gboko, Benue State; Obajana, Kogi State; and Ibeshe, Ogun State.
Others are: Lafarge Cement WAPCO Plc; Cement Company of Northern Nigeria Plc; Ashakacem Plc and Cross-River based United Cement Company.
It is common knowledge that cement price determines in no smaller way, the number of houses that may be constructed or built hence, the lower the price of cement, the higher the number of houses that will be built.
Despite the invaluable role of cement in development, the unprecedented increase in the price of cement, a major staple required in the building/construction industry, in the last couple of months, no doubt, remains a source of concern to all stakeholders, considering the ripple effects this is already having on the economy.
Dissecting the reasons behind the recent hike in cement price, some factors connected to the production and distribution of cement could have played a huge role. Factors such as poor transportation system, epileptic power supply, poor communication system, regulatory institutional environment that are not cost effective for running businesses in Nigeria and low access to long term finance have invariably limited the availability and supply of cement.
On the issue of transportation, many of our roads are in deplorable state. Our roads are infested by “king size potholes”, they are highly steep, too bend and very narrow.
Another factor for the escalating cost of cement in the country is the high cost of constructing the cement plant, coupled with the unavailability or inaccessibility to loans for the construction of such plants by the manufacturers. Also, the high cost of importation of heavy machines needed for the manufacture of cement, coupled with the absurd exchange rate may not be unconnected to the hike in cement price.
The lack of physical infrastructure in the country is another headache to the growth of the cement industry. As earlier stated, infrastructural facility such as power constitute one of the greatest infrastructural challenges to the production of cement.
The power situation is so bad that most of the cement plants in the country rely on self-generated power, accruing a huge cost of maintenance. The poor state of infrastructure continues to be the bane of the industry. With the hike in the price of cement, not many people can afford buying cement for both housing and other construction purposes. The implication of this is poor housing quality.
The issue of poor distribution of the product is another bottleneck that has had adverse effect on cement price. Most retailers are fond of diverting the products into undisclosed places thereby, creating an artificial scarcity.
Housing has the potential of becoming an engine room of economic growth. This is because of its high yield on investment, a high multiplier effect and a host of beneficial forward or backward linkages in the economy. One way of achieving sustainable housing development is through availability of cement and accessibility to the same. This could be possible through an effective infrastructural development.
To this end, pragmatic infrastructural development should be pursued. Roads in Nigeria should be rehabilitated, while a state of emergency be declared in the power sector. The current epileptic power supply in the country should be addressed; manufacturers spend much money to generate electricity.
In addition, government should make it easy for manufacturers to access loans. This should be at a bearable interest rate. Consequently, efforts should be taken to reduce tariffs on their importation. There should also be tax free period of 3-4 years to the newbies that are going into the manufacturing business. The reason for this can’t be far-fetched; starting cement manufacturing business is not a walk in the park. It takes a whole lot of time and planning.
Zero duty on importation will of course assist most of these industries. That will be the federal government’s contribution to the cement industry while the state government’s contribution can be centered on construction of roads and provision of water plants in areas where the plants are sited.
Cement as a facility plays a significant role in both building construction industries. Without cement, no decent building or construction could be accomplished.
The recent hike in cement price is a major concern to all citizenry. Hence, it must be well addressed if the idea of housing for all by the year 2020 in line with the 17 million housing units deficit, is to be realized.