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The Jonathan cement plan

By UDEME CLEMENT
The pronouncement by the Federal Government to make Nigeria self-sufficient in cement production by the first quarter of 2012, to most stakeholders, is a welcome development.  The issue of increase in the price of cement has been lingering since the second quarter of this year.

President Goodluck Jonathan, while evaluating the economy after 51 years of independence, said, “We have enough raw materials to produce more than enough cement that we need in this country but because our infrastructure is weak in terms of roads, power, cement manufacturing outside Nigeria is cheaper.

We must restrict the importation of cement to encourage our companies to produce and allow the companies that are producing cement to import the difference in terms of proportion. So, there is this fear of monopoly because those who are manufacturing the cement are those who are also importing.

The assumption is that they can create scarcity so that they will make more money. The good news is that by the first quarter of next year, we will be talking about export of cement. Last week, I sent for the minister of transport to do something about out train network because the present design does not include the cement factories. Cement is very heavy and if you haul cement using trucks, the cost will still be prohibitive.”

The previous increase in the price of cement, which took consumers unawares in June, brought about a timely intervention by government, compelling local manufacturers   to increase production capacity to crash down the price.  Two months after, the hike in cement price assumed an alarming rate with a bag being sold for N2, 800 against the initial price of N1, 500.

Currently, a bag of cement in some areas of Sabo, Ojodu, Berger and Isheri in Lagos goes for between N1,800 and N1,900, while some retailers in Alagbole, Akute, Olambe, Oshere and Matogun areas of Ifo local government area of Ogun State are selling a bag for N2.000.

While some people who spoke with Sunday Business attributed the persistent price hike to lack of infrastructure like constant supply of electricity to enable local manufacturers produce at a cheaper rate, others said the price increase is caused by the market forces of demand and supply as well as sharp practices of importers.  This implies that demand is greater than supply, thereby forcing the price to move upward. Some stakeholders share their perspectives:

Federal Government must provide an enabling environment- National president, Nigerian Association of Chambers of Commerce and Industry Mines and Agriculture (NACCIMA), Dr. Herbert Ademola Ajayi:

Government is thinking in the right direction, considering the increasing demand of cement in the country. This is because increase in capacity production as the government is planning would help the economy in many ways. It would crash down the price and make the product available at all times.

Government should grant more licences to individuals to import cement – The manager, Emeron Block industry in Olambe area of Ifo local government of Ogun State, Mr. Eniola Shittu:  Making Nigeria self sufficient in cement production as the president said is a welcome development.

It shows that government is trying to look inward to encourage manufacturing rather than excessive importation of the product. But before that is done, I believe there is the urgent need for government to grant more importers licences to bring in the product to meet the consumption demand in the market.

For instance, the demand for cement in the market is very high at the moment and the price is also increasing by the day, so something must be done urgently to address the situation.

This implies that the demand for cement is higher than supply in the market. For us to get to the point of equilibrium where demand and supply meet there is need to increase the supply chain from what it is currently in the country.

Increase in price and sometimes scarcity of the product are affecting those of us who are into the business of making blocks. For example, some block industries are folding up due to the high cost of cement, which is the major item used in moulding blocks that are supplied to builders at various construction sites.

Government must address the problem of infrastructure –  Executive secretary, Manufacturers Association of Nigeria (MAN), Ikeja branch, Mr. Segun Ajayi:

Infrastructure decay is the major factor militating against the growth of manufacturing sector of the economy at present. For government to increase production capacity of cement, which is used on a daily basis, there is the need to embark on massive infrastructure development.

There should be constant supply of power as well as good road for product distribution to various depots.


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