Senate Seeks Policies to Encourage Local Investors in Cement Production

Manufacturing

 

 

The Senate has called on the federal government to provide more industrial incentives and protections such as concessionary loans and larger tax incentives for new entrants into the local cement production with a view to boosting production, reduction of price and encouragement of more valuable producers in the country.

The Senate passed a resolution at yesterday’s plenary, following the adoption of a motion, entitled, ‘Need for Liberalisation of Cement policy in Nigeria,’ sponsored by Senator Ashiru Yisa (Kwara South), and five others.

The co-sponsors are Senators Muhammad Bima (Niger South); Adelere Oriolowo (Osun West); Samuel Egwu (Ebonyi North); Kabiru Gaya (Kano South); and Michael Nnachi (Ebonyi South).

Moving the motion, Yisa said cement was of strategic importance to the country’s infrastructure such as roads, bridges, drainages as well as in the construction of residential and public buildings.

He stated that the cement market is oligopolistic in nature with three players (Dangote Cement (60.6 per cent); Lafarge Africa Plc (21.8 per cent) and BUA Group (17.6 per cent) largely dominating the scene therefore making it susceptible to price-fixing practices.

He said that the significant rise in cement prices in the country and the low purchasing power of Nigerians may result in substandard building construction and non-completion of planned infrastructural works.

He added that the situation called for urgent need to encourage more local production of cement to satisfy demands with a steady growth rate of approximately three per cent per annum; a housing deficit of 30 million units and less engagement of over 10.5 million workforce of the building.

” The  cement market is oligopolistic in nature with three players (Dangote Cement (60.6 per cent); Lafarge Africa Plc (21.8 per cent) and BUA Group (17.6 per cent) largely dominating the scene therefore making it susceptible to price-fixing practices.”

 

He said unfavourable government policies such as the imposition of multiple taxes, erratic power supply, government ban on importation in violation of ECOWAS Trade liberalisation Scheme (ETLS) and subsequent lifting of importation in favour of few producers had negative implications on the growth infrastructures.

The sponsor of the motion added that if the status quo persists, the negative consequences of high prices on the economy will outweigh the benefits of producing cement locally;

He said: ”Cement is one of the few building materials in which Nigeria is self-sufficient.

As of 2018, the installed capacity of cement producers was about 47.8MMT, which is far above the estimated (2018) consumption of about a 20.7million metric tonnes. Yet, the prices of cement in Nigeria (N3, 800) are about 240 per cent higher than the global average.

”Cognisant that cement takes a large share of domestic expenditure, and the price of such commodity; significantly impacts the government’s ability to provide much-needed infrastructural works required for the growth of our economy.

Further cognisant that the recent increase in price of cement ( from N2,600 N3,800) slowed down the amount of construction work being embarked upon thus negatively affecting labour engagement and almost collapsed the procurement plan of the governments in 2020 Appropriation Act.”

Source: THISDAY 

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