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Nigerian govt summons BUA, Dangote, Larfarge over rising cost of cement

Nigerian govt summons BUA, Dangote, Larfarge over rising cost of cement

Nigeria’s Minister of Works, David Umahi, has summoned an urgent meeting with all cement manufacturers in Nigeria.

The meeting was meant to deal with the escalating cost of cement despite huge patronage by road and housing contractors.

Those invited are: Dangote Plc, BUA Plc, Larfarge and others.

According to a press statement signed by Orji Uchenna Orji, special adviser (media) to the minister, the meeting shall hold on Monday, February 19, 2024, at the Federal Ministry of Works, Mabushi-Abuja.

The Minister stated that “it is common knowledge that the manufacturers have their challenges, which we shall look into, but from our findings, the disparity between ex-factory price and the market price is wide. We therefore need to look into the situation and other issues with a view to finding a common front.”

Nigerians had expressed shock when the price of cement crossed N10,000 per bag.

The rising cost of cement in Nigeria

Cement is a crucial construction material in Nigeria, with the country being one of the largest consumers of cement in Africa. However, the cost of cement in Nigeria has been on a steady rise over the past few years, causing concerns among stakeholders in the construction industry.

One of the primary reasons for the rising cost of cement in Nigeria is the high cost of production. The country’s energy costs are among the highest in the world, which significantly increases the production cost of cement. Additionally, Nigeria’s cement plants are located mainly in the southern part of the country, far from limestone deposits found in the north. The high transportation costs of moving raw materials to cement plants further increase production costs.

Another factor contributing to the rising cost of cement in Nigeria is the devaluation of the Naira. The Nigerian currency has experienced significant devaluation against major currencies like the US dollar and Euro, making it more expensive to import raw materials and machinery required for cement production. As a result, local manufacturers have had to pass on the increased costs to consumers, leading to a rise in cement prices.

The COVID-19 pandemic has also contributed to the rising cost of cement in Nigeria. The pandemic disrupted global supply chains, leading to a shortage of raw materials and an increase in transportation costs. Additionally, lockdown measures implemented by various governments affected production levels and demand for cement, further impacting its price.

Inflation has also played a role in the rising cost of cement in Nigeria. The country’s inflation rate has been on a steady rise over the past few years, reaching its highest level in over two years in December 2020 at 15.75%. This has led to an increase in production and transportation costs, which manufacturers have passed on to consumers through higher cement prices.

The high demand for housing and infrastructure development in Nigeria has also contributed to the rising cost of cement. The country’s growing population and urbanization have led to an increased demand for housing and infrastructure development, putting pressure on cement manufacturers to produce more at higher costs.

 

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