Some months ago, specifically, in August 2023, the Minister of Works, Mr. David Umahi, an engineer, became a cement evangelist preaching the gospel of using cement in the construction of federal government road projects in the country.

The proposal was to actively patronise local cement manufacturing companies all year round. Then, a bag of 50 kg of cement went for between N4,500 and N5,100 depending on the location of the buyer. But all these changed in January 2024 when the price of a bag of cement suddenly jumped from N5,300 to N7,000 and kept jumping up prompting the government to intervene.

On Monday, major cement manufacturers in Nigeria, Dangote Cement Plc, BUA Cement Plc and Lafarge Africa Plc and Cement Producers Association met with a federal government team made up of the Minister of Works and his counterpart in the Ministry of Industry, Trade, and Investment, Ms Doris Uzoka-Anite where they agreed to apply the breaks and said that the price of a bag of cement will not exceed between N7,000 and N8,000.

A day after the ministers met with cement manufacturers, another Minister, the Minister of Housing and Urban Development, Arch. Ahmed Dangiwa met with Cement and Building Materials Manufacturers and threatened that the government would allow massive importation of cement if the price was not reduced across the country.

“The government stopped importation of cement in other to empower you to produce more and sell cheaper. Clearly, this is a crisis for housing delivery. An increase in essential building materials means an increase in the prices of houses,” the minister said.

Mr Dangiwa said the cement manufacturers are enjoying the benefits of government policies. “The government stopped importation of cement in other to empower you to produce more and sell cheaper. Otherwise, the government can open the borders for mass importation of cement, and the price will crash, but you will have no business to do”, he stressed.

The recent development followed the increase in prices of cement in the country reaching as high as N13,000 in some cement retail shops in Abuja.

According to the communique issued on Monday after the meeting, Mr. Umahi said cement manufacturers admitted the high prices in some parts of the country while noting that the retail price should not cost more than N8,000 per 50kg bag of cement.

His words: “The essence of this meeting is the concern of the public and also the fact that this ministry since August has been preaching on how we can utilise our local contents in the construction of our roads. At the time we think we are winning we are now having these issues.

While reading the communique, Mr. Umahi said: “The meeting noted the challenges of the manufacturers like the cost of gas; high import duty on spare parts; bad road network; high foreign exchange; and smuggling of cement to neighbouring nations.

“The government noted the challenges and reacted as follows: Federal Ministry of Industry, Trade and Investment to seek some remedies from Mr. President on the cost of gas and import duties.

“Federal Ministry of Works to give more attention to fixing the roads, especially around the locations of the manufacturers.

“On the issue of smuggling cement, the Federal Ministry of Industry, Trade and Investment to deepen the already started engagement with the National Security Adviser on how to stop the smuggling.

“Certain issues including smuggling, bad roads, high energy costs, and the forex crisis caused the high price but manufacturers have expressed their readiness to bring down the prices in the future.

“The cement manufacturers and the government noted that the current high price of cement is abnormal in some locations nationwide. Ideally, cement retail prices should not cost more than N7,000.00 to N8,000.00/ 50kg bag of cement. Therefore, the three cement manufacturers: Dangote Cement Plc, BUA Cement Plc, and Lafarge Africa Plc have agreed that cement cost will not be more than between N7,000.00 and N8,000.00/50kg bag depending on the location,” the communique read.

They, however, added a condition that the price drop from the current market price would largely depend on the government fulfilling its promised interventions in certain areas of concern to ameliorate critical challenges faced in the industry.

Retail price for cement jumped from N5,000 to N10,000 within one week in the open market, after wholesalers citing increasing cost of transportation and other variables, made adjustments to the price they sell to retailers.

Retailers in turn transferred the additional cost burden to consumers to stay afloat.

Although the government advised cement manufacturers to set up a price monitoring mechanism to ensure compliance, and manufacturers willingly accepted to do so and to sanction any of their distributors or retailers found wanting, the new price regime may not be achieved instantly.

Reason: most of the retail outlets, even distributors stocked their shops when the prices were high, and it would be economically suicidal for them to sell it below the price they bought it. For any meaningful change in price, according to a cement seller in ACO/AMAC estate, Airport road, Abuja, who sought anonymity, they would have to sell what they have in stock first before adjusting their prices to reflect the new reality.

“The meeting agreed to reconvene in 30 days to review progress made”, the communique added.

In her remarks, Ms Uzoka-Anite said it was worrisome that the price of cement was surging despite her ministry’s regulatory policies and the Backward Integration Programme (BIP) introduced to manage cement price and development.

She expressed worry that the whole idea of the BIP on the management and development of the cement manufacturing industry is not bearing the desired fruit.

Mr Dangiwa said the cement manufacturers are enjoying the benefits of government policies.

“The government stopped importation of cement in other to empower you to produce more and sell cheaper,” he said.

“Otherwise the government can open the borders for mass importation of cement, the price will crash, but you will have no business to do.”

TEXEM Advert
He said the reasons given by cement manufacturers for the price increase – the high cost of gas and manufacturing equipment – were not enough for such astronomical pricing.

While cement manufacturers can control the prices they sell the product, wholesalers and retailers often, arguably based on their operational costs, sell at prices of their choosing.

Mr Dangiwa, however, said the government wants the manufacturers to compel the wholesalers and retailers to sell at fixed prices.

He expressed his displeasure at the position of the Cement Manufacturer Association of Nigeria (CEMAN) that the association “does not interfere with the pricing of cement.”

He said the association should not just fold its arms when things were going wrong. “One person cannot be selling at N3500 per bag and another selling at N7000 per bag and you cannot call them to order,” he said.

“The association is expected to monitor price control, otherwise the association has no need to exist.”

Earlier, the Executive Secretary of CEMAN, Salako James, said the housing policy of the administration of President Bola Tinubu was laudable and every responsible Nigerian has to key into it. He, however, identified some areas of concern and appealed to the government to look into them to tackle the issue of cement pricing.

Mr Salako identified the challenges of gas supply to heavy users like the cement industry and urged the government to create a window whereby gas will be bought with Naira instead of dollars.

He also complained about the distribution channel, stressing that there was a great difference between the price from the manufacturers and the market price. He called for government intervention to help stabilise the situation and bring sanity to the economy.

At the end of the meeting, the minister directed that a committee should be constituted to review the situation and come out with implementable resolutions that would benefit the common Nigerian.

The News Agency of Nigeria reports that the three major cement producers, Dangote Plc, BUA Plc, and Lafarge Plc were represented as well as other industry stakeholders.