• Saturday, May 18, 2024
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Developers fault FG’s brokered cement price at N7000 to N8000/bag

Cement makers’ bumper Q1 earnings fail to reflect in share performance

Real estate developers have faulted the N7,000 to N8,000 for which a 50kg bag of cement is to be sold following the intervention of the Federal Government on the soaring price of the product to almost N15,000 per bag. The new price depends on location and brand.

Read also: Homelessness, job losses loom as cement price nears N15,000/bag

They say the price is still not realistic for a housing sector that is struggling with other input costs, galloping inflation and volatile exchange rates, adding that at that price, housing affordability will continue to be a pipe dream while many Nigerians will remain in the rental market.

The government, in reaction to the soaring price and, in its attempt to halt it, called a meeting with the major product manufacturers such as BUA, Dangote and Lafarge, during which the price range was set at N7,000 to N8,000 across various locations in the country.

David Umahi, minister of works who called and chaired the meeting, announced the new price increase, describing the hitherto prevailing price as excessive and counter-productive to the economic growth ambitions of the government.

Developers and other major stakeholders in the country have, however, said that though the N7000 to N8000 is a significant reduction from the N10,000 to N15,000 the product was selling, it is still quite high given that, just a month ago, the product was selling for between N5,000 and N5,600.

“The emphasis is mainly on cement because it is the most recent in terms of price rise, but nobody is saying anything about other building inputs, especially rod also known as reinforcement,” Layode Lana, a developer playing at the mid-income segment of the market told BusinessDay.

Lana, who is championing the use of local content in housing development, stated that Nigerians are worried, saying that the price of cement shouldn’t be this high given that much of the raw materials are sourced locally and they abound in large deposits in many parts of the country.

Ifeyinwa Molokwu, another developer with a special interest in low-mid-income housing, agreed with Lana, stressing that if the government is serious about affordable housing for low-income earners, it should start with making building materials affordable through policy intervention.

“Cement is a major component of building and construction. In short, all housing development initiatives, including prefabricated buildings, are cement-based and that tells you the importance of that material in building and construction. Building your house at N7000 to N8000 per bag has already taken it away from the affordability class,” she said.

Another developer who did not want to be named, said it point black that until the price of cement drops to between N3,000 to N4,000, Nigerians who have not built or bought their own houses should forget it, insisting that the high price of cement coupled with the high price of other input materials will make houses unaffordable to millions of home-seekers.

Meanwhile, despite the agreed price reduction, manufacturers are insisting that the decrease from the current market rates depends on the government’s commitment to addressing significant challenges within the sector.

They hinged their reason for the price hike on surging inflation, cost of input materials, energy cost, especially the rising diesel price, and the volatile exchange rate among others which Umahi highlighted after the meeting.

The minister added such factors as “smuggling, poor road conditions, elevated energy expenses, and the foreign exchange dilemma,” pointing out that the manufacturers were willing to reduce prices provided these issues were effectively addressed by government interventions.

In the last couple of weeks, the price of cement went as high as N10,000 to N15,000. Before this rise, the product was selling for N5,000 to N6,000, prompting the Cement Producers Association of Nigeria to issue a cautionary statement, expressing concerns that the Federal Government’s ongoing plan to introduce concrete roads could potentially increase the price of cement to N9,000 per bag.

Though David Iweta, the association’s national chairman, and Reagan Ufomba, the national secretary, commended the minister of works for supporting the idea of cement-made roads, they warned about potential adverse consequences if the supply side of the equation was not adequately addressed.

“Our findings from various parts of the country show that cement sells for as high as N6000 per bag in the rainy season. We predict that it will sell for over N9,000 per bag in the dry season, especially with the pronouncement of the minister of works on cement technology and the marching order on housing by Mr President if the government does not take proactive steps,” they said.