Victor EzejaThe Centre for the Promotion of Private Enterprise (CPPE), has described as “very unfair” the comments made by members of the Nigerian House of Representatives, against cement manufacturers regarding the current high cost of cement across the country.
The High price of cement has been a source of concern to many Nigerians given the impact on the construction industry and the economy generally.
The House has summoned major cement producers over the price hike. The summon followed a motion jointly moved by Gaza Gbefwi (SDP, Nasarawa) and Ademorin Kuye (APC, Lagos), during plenary on Wednesday.
Currently, a bag of cement is sold at N10,000 to N11,000 at retail price. This is as the Federal Government had after meeting with producers last month, agreed to bring down the price to about N7,000 or N8,000 per bag.
In a statement signed by the CEO of CPPE, Dr Muda Yusuf, the think tank said the remarks made by the House of Representatives members on cement price “portrayed cement manufacturers in a very bad light.”
It said that while some lawmakers accused manufacturers of being exploitative by engaging in arbitrary fixing of cement price, others described them as unpatriotic.
“These were narratives on the floor of the house which we consider to be most unfair to investors in the cement sector, especially when the perspectives of the cement manufacturers had not been heard by the members of the house,” it stated.
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According to Yusuf, the narratives are capable of inciting the public against cement manufacturers and putting their huge investments at risk. “ It is a dangerous thing to do, given the huge stake they have in the Nigerian economy and their enormous contributions to the economy,” it added.
It advised the leadership of the green chambers to ensure “moderation in the use of language to avoid adverse consequences for investors in the economy, going forward.”
The Centre said it requires a thorough investigation into the dynamics of cement pricing and factors driving it before making any conclusion on whether cement manufacturers were guilty of arbitrary price fixing or not.
“Cement manufacturers were disparaged, denigrated and portrayed as deliberately inflicting pains on the Nigerians by arbitrarily increasing the price of cement. This is most unfair in our humble opinion. Such weighty allegations should be premised on painstaking study, empirical facts and evidence. The dimensions of the pricing dynamics need to be properly understood.”
It warned that for an economy seeking to industrialize, attract investors and create jobs, such commentaries do not serve the country any good, adding that in line with the principle of fairness, the cement manufacturers should be given an opportunity to tell their own story before the lawmakers could come to a fair conclusion and judgement.
Yusuf noted that it is more worrying for the fact that major players in the sector are indigenous companies making giant strides amid a harsh operating business environment. It observed that at a time when manufacturing appears to be the most challenging enterprise in the Nigerian economy, leading to exit of foreign firms, the indigenous companies have managed to remain in business and have created hundreds of thousands of jobs, paid billions of naira in taxes and executed numerous corporate social responsibility initiatives.
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“The business of manufacturing is perhaps the most challenging enterprise in the contemporary Nigerian economy. Many foreign firms in that space have either exited the country or downsized their operations.
“We appeal to the national assembly to always extend due courtesies to investors in the economy in the course of their legislative duties. The private sector plays a very critical role in the economy. They account for over 80% of the country’s GDP, about 90% of the employment and over 70% of the government revenue. They deserve to be addressed with respect, courtesy, civility and fairness. This is without prejudice to the imperative of compliance with extant laws and regulations as well as responsible corporate citizenship by the investors.”
The centre further highlighted other challenges in the business environment that cement producers face such as high energy costs, logistics for distribution of the products, surging inflation, naira depreciation and forex scarcity among other macroeconomic and structural headwinds.
“All these are variables which are not within the control of the manufacturers and which have a profound impact on production and operating cost.
“It is important to stress that matters of this nature require painstaking and thorough investigation to determine the pricing dynamics and the ramifications of the factors driving prices. This is critical to avoid hasty and emotional conclusions.”
While admitting that the risk of profiteering as a result of monopoly exists in Nigeria’s cement industry because there are only a few dominant players, the economic expert stated that it can be addressed using regulatory measures and called on the Federal Competition and Consumer Protection Commission (FCCPC) to ensure compliance with the Federal Protection and Competition Act of 2018 for the protection of the interests of consumers and the general public. “If there are proven lapses in this respect, the FCCPC should be held to account,” he added.
He further argued that with the current ex-factory price of cement by the major players being less than N7,000 per bag, it means that the culprits that may be causing pricing issues “could also be within the cement distribution chain over which the manufacturers have limited control.”
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
