In the quest to make the cement industry in Nigeria more competitive and robust in growth, the upper chamber of the National Assembly has prescribed what it deems fit as the remedy suitable for the hour.
The senate in a recent motion titled “Need for Liberalisation of Cement Policy in Nigeria” pushed forward by Lola Ashiru, senator from Kwara, and five other lawmakers at a recent plenary requires the Federal Government to provide incentives for investors to boost production of cement in the country.
Incentives aimed at this boost included concessionary loans and larger tax incentives especially for new entrants into the cement industry. This move is unassociated with the recent price hike in cement across the country.
Recall that recently, Nigeria’s cement giant with the biggest market capitalisation; Dangote Cement debunked claims that the company sells its product in Nigeria at exorbitant prices, culminating in the government’s inability to build infrastructures needed to enhance the economy.
Dangote further denied any involvement in selling with a higher retail price tag in comparison to other neighboring countries like Ghana and Zamfara.
On a cautionary note, the legislative arm of government warned that the frequent hike in cement prices juxtaposed with the low purchasing power of Nigerians may result in substandard constructions capable of increasing substandard infrastructures and abandoned structures across the country.
The need to encourage local production was however encouraged as a viable alternative to the three players identified as Dangote, Lafarge, and BUA cement in the industry.
In the words of Sen Lola Ashiru
“The Nigerian cement market is oligopolistic in nature with three players – Dangote Cement (60.6 percent); Lafarge Africa Plc (21.8 percent) and BUA Group (17.6 percent) largely dominating the scene, therefore making it susceptible to price-fixing practices,”
“If the status quo persists, the negative consequences of high prices on the economy will outweigh the benefits of producing cement locally.”
In recent times…
Dominant cement manufacturers have been accused of raising prices indiscriminately causing construction activity to slow. Efforts by the government to curb the trend have not borne much fruit. The three key payers and their market capitalization according to construction review online are:
- Dangote Market share 60% cement market share
- Lafarge Africa 20% cement market share
- BUA Cement 17% cement market share