The price of 50Kg of cement has risen across in Nigeria by over 35% to N3500 and as much N4000 in some places from around N2,400 to N2,700 per bag as of September.
This recent hike in price, which started in October was initially attributed to the #ENDSARS protest which hampered movement across the country.
However, it has been revealed that the cement price hike is a result of artificial scarcity created by the insufficient supply of the product due to low production volume by the producers in Nigeria.
The price of cement from the factories had not changed according to a Punch report. Retailers and distributors increased the prices to profit from the scarcity created by the inability of the producers to meet the market demand for cement.
A retailer, who simply identified himself as Malik, said that the demand/supply gap had caused a hike in the market price of cement.
He told Punch that “the problem is from Dangote and other cement manufacturers. They’ve created artificial scarcity. It’s not like they’ve increased the price; the prices are the same. “Now if you pay for 10 trucks and you get three or four, what happens is that you will naturally increase the price of your cement. So it’s caused by Dangote and all other cement manufacturers.”
“If you’re producing cement and your cement is everywhere, naturally your price will come down. The demand is there but you cannot meet up with the demand because the cement companies have caused artificial scarcity,” he added.
Abdul Rabiu, Founder and Chairman of BUA Group, on Sunday while speaking during his induction as Fellow of the Institute of Director explained that Nigeria’s cement industry was currently producing 28 million metric tonnes of cement per annum, creating 32 million metric tonnes gap in production volume.
He said that the current production volume amount to 120kg per capita when the demand is 300kg per capita.
He said, “The cement industry in Nigeria is currently producing about 28 million metric tonnes of cement per annum, which translates to about 120kg per head in terms of consumption per capita.
“The potential exists because ideally, Nigeria should be producing at least 300kg per head or about 60 million metric tonnes per annum – which is double our current production capacity. Based on this, it is very clear that we are not even producing enough cement.”
Rabiu added, “Where others see low consumption figures, I see opportunity; it means Nigeria and the surrounding region are still home to huge opportunities in housing, infrastructure, and allied industries.”
“This is why the price of cement in the market is currently about 20 per cent higher than the price of cement ex-factory. Plants are ageing, and BUA is one of the few that have new plants.”
He added that his company had taken significant steps to tangibly bridge the demand gap by 2022.
BUA Cement Plc has signed an agreement with China’s Sinoma CBMI to build three new production lines of 3 million metric tonnes per annum each. The new production lines will be located at Adamawa, Edo and Sokoto States, according to the company.
By: Ifunanya Ikueze