By Dakuku Peterside
Cement and concrete are synonymous with power ;the power of the financial system and infrastructural growth. Cement is particularly an indicator of how we prioritise housing, roads, and different infrastructure tasks that depend on it. When cement costs go up constantly, it reverberates throughout the nation, sending chilly chills down the spines of many. It means fewer individuals can afford properties, a basic human proper. Though cement is only one ingredient within the building trade, it has come to characterize the trade itself, so the affordability of cement represents the affordability of homes and different concrete-based constructions. To thousands and thousands of Nigerians who’re nursing the hope of proudly owning their very own properties, a rise in the worth of cement threatens that hope, and in a rustic the place hope is the one viable anchor in opposition to many debilitating odds, there may be outrage and panic amongst many. In addition to the hyperlink of cement to our collective psyche of house possession, cement can be concerning the building trade, public works,native manufacturing trade, and the employment it generates.
The present cement worth hike is indicative of the financial degradation of Nigeria and the complexity therein. It showcases the interconnectivity of a nexus of things that come collectively to have a stranglehold on our financial system and the way the federal government tackles the issue of extreme hikes in cement costs typically is a case examine of the federal government’s dominant reactionary strategy to fixing delicate social points and a metaphor for mistaken software of coverage in our society. It additionally signifies how the federal government misdiagnoses issues and applies inappropriate remedy on the coverage stage.
In a blended financial system like ours, the federal government performs an important position in shaping the financial system, and in some instances, it’s the highest single stakeholder in some sectors of the financial system. The federal government is a main client within the building trade due to the various infrastructural tasks it builds. Due to this fact, the federal government is a big stakeholder in cement. However, its main position is to create an enabling atmosphere for the market forces to play their position in figuring out the cement worth whereas guaranteeing that the regulatory framework constrains the market arbitrariness. That is extra preventive than reactionary. Nonetheless, when the methods and buildings put in place to information the market fail, the federal government is anticipated to intervene within the curiosity of society. This intervention should goal to supply public worth by diagnosing and fixing issues appropriately. Applicable diagnoses are pivotal to making use of the right measures that convey sustainable options. We miss the purpose when authorities officers act like elected kings, utilizing most coercive powers to unravel an issue that requires considering and collaboration. Cement is a working example.
The worth of cement, utilizing a 50kg bag as an indicator, between Could 2023 and January 2024, a interval of about six months, has elevated from N4,250-N4,500 to N12,000-N13,000. This is a rise of between 100% to 200%. Nearly all building trade segments reacted to this astronomical rise in worth. There was a public uproar, and the federal government utilized three knee-jerk reactions: the primary was to threaten the cement producers to convey down costs or face dire penalties; the second was a menace to open the borders and permit huge importation of cement to flood the market and pressure the worth down; and the third is one other menace by the legislature to probe the explanations for the escalating value of cement. That is indicative of the mindset of our authorities officers. However realistically, we can’t clear up issues by threatening all people.
Essentially the most crucial underlying issue within the cement worth hike albatross is that the federal government is caught between protectionism (defending the native cement trade) and commerce liberalisation to curtail costs. The politics of the current cement worth hike goes past the fractures within the Nigerian financial system. There’s a notion of the politics of cement monopoly. The Obasanjo presidency initiated a coverage of selective protectionism on sure gadgets to guard native industries. Issues like cement, fruit juice drinks, pasta and sugar benefited. This enabled important industrialists to arrange monumental crops for this stuff. There was an unwritten understanding behind these concessions about these native traders reciprocating by retaining costs in test. The assumption is that permitting worldwide competitors would have modulated the native prices of these things, however the quasi-monopoly insurance policies protected them. That is one other dimension of the problem that the federal government must untangle.
Alternatively, cement producers have raised basic points that want acceptable analysis and options proffered. Points raised by cement producers are grouped into 5: first, with the overall paucity of energy in Nigeria, nearly all producers generate their very own vitality, and lots of depend on gasoline. Regardless of being a gas-endowed nation, it’s merely unavailable – a paradox of lots. The out there gasoline is denominated in USD and the worth has elevated by over 300% prior to now 6 months. Second, Cement manufacturing depends on many imported inputs similar to gypsum, equipment, excavators, explosives to blast the mines, spare components, and propylene to supply luggage, all of that are imported utilizing USD. The overseas alternate is simply not out there, and the USD volatility in opposition to the Naira has not helped issues. Third, customs duties are listed in USD, and currently, it has moved from 450/USD to 1700/USD in only a few months, a greater than 300% enhance. Fourth, the price of diesel, which is crucial within the transportation of cement and for excavators to mine limestone, has tripled over three months. Fifth, the unfriendly working atmosphere characterised by corruption, strangulating paperwork and a number of taxation is devastatingly affecting the trade.
Addressing this difficulty requires a complete strategy involving varied stakeholders. A place to begin for analysis of the problem is to search out out why gasoline is just not out there, why we can’t transport cement by rail, what might be carried out on the matter of overseas alternate elements within the cement manufacturing sector, tax harmonization, Normal insecurity, and undue bureaucratic interference to advanced problems with market forces. Any resolution that doesn’t deal with these is, at finest, jaundiced and unsustainable. It’s myopic to assume that the federal government will ignore the numerous exterior and inside intervening variables underpinning the extreme hike within the worth of cement, whip the trade to an agreeable worth, and assume the issue has been solved.
All elements thought of, due to the socio-economic influence of cement, the federal government wanted to diagnose the problem appropriately, seek the advice of broadly, and develop a sustainable coverage resolution. The impression I get is that this isn’t the case . The way in which we’re going, many manufacturing issues within the nation will go down except one thing is finished about FX, working atmosphere, import obligation, energy and, most significantly, corruption. If cement costs proceed to skyrocket, the price of public infrastructure will escalate, many will lose their jobs, and the nation can be thrown into additional financial melancholy. There is probably not a straight reply to resolving the paradox of cement worth hikes, however it’s pressing and crucial {that a} holistic strategy to tackling the issue is adopted.
It’s necessary to notice that addressing the excessive value of cement requires collaboration between the federal government, trade gamers, and different stakeholders to implement sustainable and sensible options. The federal government should work with the cement trade to develop insurance policies that stabilise costs and stop pointless fluctuations. It should implement insurance policies that guarantee truthful competitors and keep away from worth gouging. It ought to encourage wholesome competitors within the cement trade by selling new entrants with requisite capability , stopping monopolies, and streamlining the regulatory processes to make it simpler for brand spanking new gamers to enter the market. It ought to put money into infrastructure growth to enhance transportation networks and cut back the price of transporting uncooked supplies and completed merchandise. Put mildly, the federal government should create an exterior atmosphere that’s business-friendly.
The cement trade however should implement energy-efficient applied sciences to cut back operational prices and discover different and renewable vitality sources to energy manufacturing crops. They need to put money into analysis and growth to search out modern and cost-effective strategies for cement manufacturing and discover new supplies or processes that might be used as alternate options to conventional cement. They need to encourage utilizing native supplies and assets to cut back dependence on imported inputs and assist the event of a sturdy native provide chain for uncooked supplies. They need to desist from arbitrary will increase in worth only for the sake of maximising revenue, particularly given the concessions the federal government has given by defending the trade from overseas competitors.
Our housing and infrastructural wants are monumental. A rustic of over 200 million individuals wants cement to construct homes for individuals and assemble primary infrastructure. The excessive value of cement can solely exacerbate the paucity of delivering on these necessities. Due to this fact, all stakeholders should work collaboratively to make sure the provision of cement at reasonably priced costs.
