• Monday, July 15, 2024
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Possible compromise of construction quality over cement price hike worries builders

Completion of rail project to enable cement price reduction – Minister

Professional builders say they are worried over the astronomical rise in the price of cement which, in the last 60-90 days, has gone up from N2,600 per 50kg bag in October to N3,500 now, depending on the brand, representing almost 30 percent increase, the highest in over five years.

The builders under the aegis of Nigerian Institute of Building (MIOB), is also alarmed that given this increase and the low purchasing power of Nigerians, there may be temptation for compromise of construction quality.

The builders note that, while it may be rationalised that the Covid-19 induced lockdown did not make the manufacturing sector produce (partly or fully) for some time and that increased construction demand after the lockdown has contributed to hike in cement prices, the argument cannot be a justification for the present high price increases.

They note further that, virtually all the material inputs for cement production are available locally. All the cement manufacturing plant have been existing in Nigeria before the lockdown. They acknowledge that there may be need to maintain and repair, but that is not enough justification for the astronomical increase in cement prices.

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They acknowledge further that cement manufacturers operate in the Nigerian economy, but Nigerians, who use their products, are also in the same setting where macroeconomic variables of interest rate, exchange rate and inflation have diminished purchasing power.

“The government should step in quickly and save the nation from imminent danger of substandard building construction, “the institute warned in a statement at the weekend.

According to the national president of the institute, Kunle Awobodu, Nigeria is a country that is blessed with population, intellect and resources, explaining that the country’s population could be a strength or a liability depending on how resources are managed.

For investors and manufacturers, he noted, the population presents a large market for their products while, for the citizens, the population presents a good reason for a crash in prices because of the law of large numbers.

“The recent increase in the price of a 50 kilogram bag of cement from around N2,600 to N3,500 and beyond portends bad omen for the construction industry and the nation at large.

“Whatever the underlying reasons given for the hike in price, the NIOB is actuated by public interest to bring the attendant or unintended consequences to the limelight so that stakeholders can appreciate and respond to the emergency that the nation is confronted with,” Awobodu explained.

He noted further that, even at previous prices, before the hike, Nigerians were confronted with the challenge of owning their homes and developing other infrastructure, adding that reports of ‘cutting corners’ due to compromised material inputs abound as Sandcrete blocks, concrete and mortar are products in which cement is part of their production.

“These products also play a major role in the cost and strength of structures built with them; while we are not sanctioning ‘cutting corners,’ that is, compromise on standard, the present price increase will only exacerbate an already volatile and precarious situation,” he said.

There is need now, more than ever before, for more vigilance and policing of the construction processes. A country with sub-normal conditions of living will battle with more crimes with the implications of spending more to police the society. It thus pays more to invest in improving the quality of living to reduce predisposition to it.

Price increases in the inputs of construction without corresponding increase in citizens’ purchasing power will reduce activities in the construction sector that are meant to rejuvenate the economy. This will translate to loss of jobs and its inter linkages. Where there is even activity, especially in the informal sector, risks are multiplied.

Construction contracts in a regime of skyrocketing and unstable prices will witness many fluctuation claims with the potential for disputes and project abandonment. A cycle of project failures may start when prices are beyond the reach of clients and developers.

The onus, therefore, lies on the government to urgently address these macroeconomic issues to favour the overall economy and, especially the construction industry, that has the potentials to stimulate growth.