HomeViews and ReviewsMinister Dangiwa Versus Cement Cartels

Minister Dangiwa Versus Cement Cartels

By

Felix Oboagwina

Wednesday, 31st October 2023, CEO of BUA Cement, Abdul Samad Rabiu, paid a visit to President Bola Ahmed Tinubu in Aso Rock. As he walked out of the President’s office, journalists swarmed round Rabiu. To cut this narrative short, the Billionaire businessman said he had come to assure the President that by March 2024, a bag of BUA Cement would start selling at N3,500 instead of N4,500 for which it then sold.

The market leader, Dangote Cement, retailed for between N5,000 and N7,000 per bag. The hike not only alarmed but frustrated users because just two months earlier, Dangote Cement sold for a lower price of N3,500 max. The jump in price annoyed Nigerians. Thus, when the media went to town with Rabiu’s assurance of crashing the price, the news provoked much happiness nationwide.

Easier said than done, however, Rabiu’s optimism quickly evaporated into thin air. Mysteriously, thereafter, the price of cement went crazy and bizarre. The popular 50kg bag of cement flew to N10,000, then N12,000 and landed at N15,000. This year, Dangote Cement PLC reported a profit of N166 billion for first quarter of 2024.

In Nigeria, the dominant cement brands are Dangote, BUA, Lafarge and Elephant. For a country of 250 million, being serviced by four brands sounds like a monopoly or oligopoly, when a few companies exert significant control over a given market and together control prices by colluding with each other to promote uncompetitive prices. Today, manufacturers blame the skyrocketing rates on the falling value of the Naira. From the N700 per dollar pre-May 2023, the Naira had gone to exchange for N1,600 to the dollar, although it has now dropped to about N1,200. In addition to using the unhealthy Naira as scapegoat, cement makers blame the high cost on expensive gas and manufacturing equipment.

However, in the midst of the darkness, a silver lining appeared to appear from the midst of Tinubu’s cabinet ministers.

There are 46 ministers, although 13 of them wear the title of Junior Minister or Minister of State and 33 substantive ones. Suddenly, two substantive ministers called cement manufacturers to a meeting. The meeting by Dave Umahi, Works Minister, took place first on Monday, February 19, 2024. At that meeting, Minister and manufacturers fixed the price of cement at between N7,000 and N8,000 max.

The following day Tuesday in Abuja, Ahmed Dangiwa, Minister of Housing and Urban Development, also met representatives of the Cement Manufacturer Association of Nigeria (CEMAN). And there things exploded. Dangiwa man displayed uncommon knowledge of all the tricks and shenanigans. He told the producers the implication of their pricing: “This is a crisis for housing delivery. An increase in essential building materials means an increase in the prices of houses.”

For Dangiwa, the reasons for the price hike were insufficient to justify such outrageous pricing. He confronted them with the bare facts, that the government stopped cement importation to enable local companies to increase output and lower prices.

Then he dropped the banger: “Government can open the borders for mass importation of cement, the price will crash, but you will have no business to do.”

When CEMAN said the association “does not interfere with the pricing of cement,” Dangiwa hit back with, “One person cannot be selling at N3,500 per bag and another selling at N7,000 per bag and you cannot call them to order. The association is expected to monitor price control; otherwise, the association has no need to exist.”

Where the President and the Works Minister pacified and appeared to have lost touch with reality, Dangiwa spoke to manufacturers in the language they understood. He threatened them. Government, Dangiwa said, could fling open the borders to tame prices.

He told them: “We know that some of the key components of producing building materials, especially cement, are locally sourced, so the recurring disproportionate increase in the price of cement is unacceptable and unreasonable. Key input materials such as limestone, clay, silica sand, and gypsum within our borders should not be dollar-rated.

“You cannot continue to give excuses and blame it on the dollar all the time. The worst part is that other building materials manufacturers take a cue from cement manufacturers, and once they see that you increase your price, they do the same. Recently, this is happening almost every week, and it has to stop.”

Fact is Nigeria has been hijacked by cartels. They have the country by the jugular mercilessly. Like cartels the world over, the Nigerian business profiteers nurse the motive of profiteering at all costs. Governments have been unwilling to confront them and break that hold today. Past pro-people regimes behaved otherwise.

General Murtala Mohammed imported Argentinean beef to force down the price of meat in the market.

General Gowon goes down in history for the Cement Armada. Ships upon ships upon ships of cement harboured at the Apapa Lagos port and crashed the price of the product.

In his own time, when the price of cement rose astronomically and the country complained, Goodluck Jonathan, in May 16, 2011, invited producers to Aso Rock and gave Dangote, BUA and others 30 days to crash cement price to N1,000. They succumbed.

While that drama played out, four cement manufacturers in February 2013 wrote to Jonathan to demand import licences, calling themselves “Cement New Entrants Stakeholders.” They each wanted to be granted papers by Jonathan to import 5 million metric tons of cement. According to them, granting import licences was a sure way of forcing down cement price to between N500 and N1,000 per bag and breaking the current monopoly of the “cartel” in the industry.

There is much to learn from this engagement. Monopolistic profiteering dictates cement pricing in Nigeria. The monopoly flaunts every excuse to justify the high price, which the proposed independent importers told Jonathan was “making Nigeria to be classified as the country with the highest price of cement in the world” with the ex-factory price then fixed between N1,400 and N1,800 per bag.

That is the way to go. Good history ought to repeat itself. Open the borders. Grant licences to import. Create competition. It will amount to a win-win for Nigerians because cement imports will create a new line of businesses as well as jobs through the value chain of importation, ports, clearing, re-bagging, warehousing, marketing, advertising, distribution and retailing. This the Housing Minister Dangiwa knows as a professional Architect, a player in the building industry and a politician who wants to deliver pocket-friendly housing to the masses.

He had similar maintained this humane stance when, as Managing Director of the Federal Mortgage Bank of Nigeria (FMBN, 2015–2022), he packed several human-faced, pro-people policies into his tenure. He processed N39.5 billion worth of refunds to 247,521 retired Federal housing contributors. Under him, FMBN made available NHF mortgage loans to 5,900 beneficiaries as well as home renovation loans to 77,500 people. He, also, led efforts to develop the Diaspora mortgage loan. This innovative scheme specifically aimed at assisting Nigerians living abroad to own homes without the weeping tales of getting duped by relatives or friends in Nigeria.

Minister Dangiwa knows that ONLY the cartels’ insatiable greed propels the price of cement sky-high. Exorcising this evil begins with taming the profiteers and making them sell cement to Nigerians at the N3,500 per bag that CEO of BUA Cement, Abdul Samad Rabiu, promised Tinubu at Aso Rock.

OBOAGWINA IS AN AUTHOR, JOURNALIST AND PUBLISHER, REACHABLE VIA: [email protected]

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