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Proposed ban on cement import: In whose interest?

The Federal Government’s proposed ban on cement importation has generated divergent views from industry experts. ALEXANDER CHIEJINA in this piece wonders whose interest the ban will serve.

Nigerians woke up to herald the New Year with pomp and ceremony only to be greeted with the news of the Federal Government’s intention to withdraw the subsidy from Premium Motor Spirit (PMS).

Following Federal Government’s withdrawal of petrol, massive protests across various parts of the country rented the air given the socio-economic implications the removal will have on Nigerians. Besides, the withdrawal generated heated debates by Nigerians from all walks of life, including the civil society groups and the Nigerian Labour Congress (NLC).

Bearing in mind that fuel subsidy hasn’t benefited most Nigerians, several economists see the subsidy regime as hugely corrupt, wasteful and a drain pipe from the treasury into the pockets of rich fuel importers.

Giving this obvious reality, the Federal Government dramatically announced the end of fuel subsidy, citing that the move became necessary in order to checkmate smuggling of the product and more so, save the economy from collapse.

Just as Nigerians continued to wish for better days to the nation’s economy, the Federal Government’s plan to ban cement import which all manufacturers in the country have been using to augment the shortage of cement in the country has generated heated debate in recent times.

The argument for and against the continued importation of cement has continued even as stakeholders await government’s decision on it. While some cement manufacturers believe they have the capacity to meet local demand and exceed the bar, experts believe that such claims should be confirmed by an independent body before any ban on importation.

Industry watchers believe that the Federal Government should do a thorough survey on the production capacity which cement manufacturers claim they produce as it has been observed that some cement manufacturers in the country collaborate with Cement Manufacturers Association of Nigeria (CMAN) to give figures of the production capacity of cement plants in the country.

CMAN has put the local demand for cement at 18 million metric tons per annum even as it has consistently lamented the high cost of transportation and power as reasons why the price of cement may not come down.

Bruno Lafont, chairman and chief executive officer of Larfage, cement conglomerate had earlier in an interview with newsmen stated that the cement price situation in Nigeria reflects the cost of production.

According to the chief executive “The cost of production is relatively high in Nigeria compared to other countries. This is due to the fact that fuel is expensive, transportation is expensive, power is expensive and difficult to get. The market is demanding but there is less capacity than demand.”

Industry experts are of the view that with the high cost of production in the country, they still wonder how 

the country will soon begin to export cement to other countries. They believe that Government’s moves to ban the importation of cement may lead to an increase in the price of cement and house rents.

Analysts say with over 150 million people and the huge housing and infrastructure deficit in the country, demand for cement should be over 35 million metric tons. Instead of allowing few manufacturers to monopolise the nation’s cement production, more cement manufacturing plants should be established to allow availability of cement before the ban will become relevant to Nigerians. 

Although government is working assiduously to ensure self sufficiency in local production of cement, it is pertinent to note that with the few cement companies in the country, the nation may not be able to meet its local demand in the immediate.

Analysts believe that self sufficiency in cement production is a welcome development but however urge manufacturers to augment local production of cement with imported product until Nigeria is able to produce enough cement to meet local demand.

Meanwhile, Kunle Awobodu, National Publicity Secretary of Nigeria Institute of Building (NIOB), advised the government to ascertain the readiness of local manufacturers to satisfy local demand in concrete terms before stopping importation.

He said: "Government should investigate thoroughly the claims of local manufacturers to satisfy local demand before accepting to stop importation. The capacity to continuously supply cement to the market and not at intermittent stages should be verified in the interest of the public".

Awobodu said if indeed local manufacturers have attained 20 million metric tonnes in combined capacity against the national acclaimed annual demand of 18 million metric tonnes. The price of cement should have naturally come down. He canvassed that the nation should not be in a hurry to stop importation until there is stable supply of the product.

According to him, "It is a great irony that despite the claims of local capacity utilisation in the manufacture of cement, the price of cement has not come down. Currently, there is nothing to be proud of in the sector.

“The government should be careful not to jump into hasty decision; they should give sufficient time to prove the production ability of the local production. It is difficult to judge or evaluate sufficiently the production capacity during the rainy season because naturally demand is low ", he added.

He noted that operators in the sector believe that the reason for the high cost is as a result of the scarcity of the product and are of the opinion that pricing should be a determinant factor in measuring availability and by extension influence a change in policy.

While commending government’s backward integration policy, he called for caution before discontinuing with the policy.

Echoing the sentiment of Awobodo, Moses Ogunleye , Vice-President, Association of Town Planners Consultants of Nigeria (ATOPCON), said the nation’s production capacity should be ascertained and if found to be true, the government will have no option but to stop the importation of cement into the country to conserve scarce resources.

He said: "Currently there is, however, no evidence of capacity utilisation as the price of the product is still high at N1, 800- N2, 000 depending on the location. I believe that pricing is a function of availability, it is ironical that imported cement is cheaper than the ones produced locally."

Experts believe that government should be patient enough and at least give a period of about 3 years to allow more cement manufacturing plants to be established before coming up with any policy to ban importation of cement because the existing cement plants in the country are too few to meet the nations’ cement demand.