Cement price crash to bridge housing deficit, stimulate demand

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By Alex C

Dangote Cement, Nigeria’s largest cement producer, has explained that the recent crash of its cement brand to N1,000 and N1,150 for the 32.5 grade and 42.2 grade, respectively, was aimed at , reducing the country’s housing deficit estimated at 17 million units and stimulating demand.

Devakumar Edwin, the company’s group managing director, who gave this explanation at the unveiling of its 32.5 grade and 3X cement in Lagos, explained further that the price slash became necessary as a response to the low per capita income of many Nigerians who desire to own their own homes but cannot afford the cost.

Dangote Cement recently announced a major reduction in the price of its brand from N1,700 per 50kg bag to N1,000, representing about 40 percent drop, for the 32.5 cement grade, an action described by industry watchers as a major boost not just to the cement market, but also to the building and construction industry in Nigeria.

Edwin traced the origin of the price slash to the backward integration policy of former President Olusegun Obasanjo’s administration about 12 years, explaining that over the years, cement manufacturers, notably Dangote Cement, have built capacity that has increased supply to the market considerably.

“Since the commencement of the implementation of the backward integration policy for cement in the country over 12 years ago, the local production capacity of the product has risen from less than two million metric tons per annum to about 38 million metric tons per annum today. During this period, over $20 billion has been directly and indirectly injected into the Nigerian cement industry, deciwith Dangote Cement Plc accounting for 60 percent of that spend”, he noted.

Edwin emphasised at the event, which had representatives of Standards Organisation of Nigeria (SON), Nigeria Institute of Architects (NIA), Block Moulders Association of Nigeria, and other stakeholders in attendance, that with the new price regime, Dangote was building the future of Nigeria and Africa in general, adding that “this investment is helping to create employment and also helping to better Nigeria and the world at large.”

He advised end users of the product to look out for the 32.5 cement grade in green bag while the 42.5 grade is in blue bag, pointing out that whereas the 32.5 grade is used for only plastering, the 42.5 grade is used for general purpose building such as block moulding, concrete casting etc.

As a way to protect consumers from undue exploitation along the distribution chain, the group managing director assured that they had concluded arrangement for intervention in the transportation of the product, disclosing that the company would be transporting the product to every part of the country at N150 and N200 per bag depending on location.

In his brief remarks at the event, Joseph Makoju, honorary adviser to the president/ CEO of Dangote Group, Aliko Dangote, noted that the cement industry in Nigeria had come of age, explaining that the country has moved from being a net importer of the product to self-sufficiency and next exporter.

“Cement scarcity used to be news in this country, but it is no longer so; we are at a stage where end-users are getting benefits of the growth in the industry. There will be more efforts to take care of the customer. The new price comes with new capacity building and all these are aimed to stimulate demand, feed the construction industry and create jobs for construction workers”, he assured.

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