By Paul Ojenagbon
RATHER than celebration, this writer felt a sense of trepidation at the recent declaration of a whooping N71billion net profit posted by Dangote Cement Plc for the first quarter of 2017 juxtaposed with the high prices of cement in the market. For just three months,which is even more amazing when only a few banks in the country can boast of something in the neighbourhood of that amount for their‘annual profit’. Cement, a major component in building and construction works currently sells at about N2,800 per bag in the market, yet Dangote Cement Plc could post such a fantastic amount net profit for just a quarter during a recessionary period such as the present economy. This is despite the fact that their sales dropped during the period under review which only means their prices were heavily padded to attain that level of performance.
It is difficult to accept any explanation that justifies the continued oligopolistic hold of Dangote Cement Plc, Lafarge Cement WAPCO Nigeria Plc and to a lesser extent, Bua Cement over the production and supply in the country. Accepted that cement manufacturing is a highly capital intensive business that cannot be left to every Dick and Harry company to operate, one finds it unacceptable that a rein of oligopoly could be allowed to dominate the market so much that the operators can determine the price at any moment and force it down our throats.
At a time in the country, there were dozens of cement manufacturing companies which allowed some leverage of competiveness in the industry relating to pricing but virtually all the cement companies in the country now fall within these three groups either by merger or outright acquisition. While it makes some business sense because of the economies of scale they stand to enjoy, such co-operations should also allow the mutual survival and existence of other parties especially the end user. Even if any other cement manufacturing companies were to co-exist alongside these big three today, they will be choked out of competition because they do not have the wherewithal.
With the national housing deficit estimated at about 18 million units and increasing each day, the situation requires urgent federal government attention. It is a vicious cycle that does no one any good because a rational property developer will transfer his cost of production to the home buyer and landlords will charge higher rents to recoup the costs. Even those who choose to build their own houses on their own are just as badly affected.Cement is a major component in building and construction and thus should attract the concern and immediate attention of the federal government and not be left to chance or corporate monopoly or oligopoly as such.
The importance of housing in any nation needs no emphasis. Even the early men, according to history, lived in caves lit around with fires to keep away wild animals.A man’s home is his fortress, a metaphor of his survival from danger and the elements. A man without a home is a drifter, with no purposeful existence; he is a man very likely to be unstable in all his ways. He is often perceived as posing a great threat to the lives and property of others in the society. If he takes to crime, it is difficult for the authorities to track and apprehend him since he has no fixed address. Even when a young man or woman has been able to eke out a means of livelihood to gain the financial capacity to rent an accommodation of his own, his housing need is only temporarily secured to the extent of the tenancy period he has covenanted with his landlord (in most cases one year) and he is subject to the whims and caprices of the property owner. Nothing is certain, anything can happen from day to day as it happens on a daily basis especially in a soulless, rat race of a place like metropolitan Lagos.
No matter how small the home, it is only when a man has been able to put a roof over the heads of his family members to shield them from the storms of the world, can he be said to have arrived. Many cultures acknowledge this.
In several countries of the world, social and financial structures are put solidly in place for the citizens to acquire houses of their own. They can access mortgage opportunities and obtain facilities based on their ability to pay back. The worst scenario is for them to live in low cost homes provided by the local councils.
In times past, even though it was still a tip of the iceberg, a lot of Nigerians had opportunities to own homes in low cost housing schemes built by the government, federal or state through the housing agencies which explains the preponderance of several government housing estates all over the country during that dispensation in the seventies and eighties.
The situation is very different now, even when government agencies build, they have the same motives as private developments which is to maximise profit. Thus, strictly speaking, the hapless citizen is on his own as far as this matter is concerned. He has to grapple with a tall order of issues and unfortunately this is at a time when the naira value has been literally shredded.
Can you imagine how many Nigerians are being denied the opportunity to build their own homes because of this problem? Agreed that the federal government has a lot on its hand at the moment, priority should however be given to this crucial one because it can lead to the country having more homeless citizens. The regulatory agency should meet with the cement manufacturers with a view to exerting some control on product pricing and arriving at reasonable price levels. To achieve this, the government should conversely work out a sustainable policy that will reduce cost of production to manufacturers.
Tax reliefs is one such example, provision of the necessary infrastructure especially power is another as well as sustaining the ongoing efforts to shore up the value of the naira which will reduce importation costs of the foreign components needed for cement production. Whatever happens, the present oligopoly should not be allowed any longer and the regulatory agency should do the needful.
*Mr. Ojenagbon, a an estate surveyor, wrote from Lagos.