…calls for liberalisation of Nigeria’s cement policy
Chairman of BUA Group, Abdulsamad Rabiu
Chairman and Founder of the BUA Group, Alhaji Abdulsamad Rabiu has said he is ready to immediately reduce the prices of his company’s cement and sugar if other companies are prepared to do so.
Rabiu disclosed this to reporters on Monday, while calling for the liberalisation of Nigeria’s cement policy to boost production and subsequently crash the price.
The BUA boss who attributed the high cost of cement in Nigeria to low production capacity, urged the Nigerian Government to open up the cement industry for more competition, expressing optimism that it would crash the price of cement.
He faulted the belief that the country is self-sufficient in cement production, saying the price of a bag cement remains high because the few producers in the country are not able to meet the huge demand.
Explaining further, he said: “Look at the numbers: Nigeria is over 200 million people today in terms of population. If you look at the production of cement, last year, we were under 30 million metric tonnes.
“In fact, last year was higher than the year before, which means that in 2019, we were doing between 26 and 27 million metric tonnes. I am talking about production, and not installed capacity, which is another thing entirely.
“Nigeria’s 200 million people make it about 130 kilogrammes per head. If you check, you will see that most countries in Africa are doing between 170 kilogrammes to 200 kilogrammes per head.
“So, Nigeria is actually producing less than other countries in Africa, apart from maybe Niger Republic. So, that means that we do not have enough capacity.”
He also pointed out that when any of the plants of the few players in the industry is faulty, the impact is immediately felt on the price of the commodity, which is passed on to buyers of the product.
“The moment you have any problem in any of the plants in Nigeria and there is a shut-down or any challenge, immediately, you will see the impact in terms of price going up.
“That is because we do not have any buffer whatsoever. So, it is like hand to mouth daily. The reason why the price of cement went up recently was simply because there was an issue at one of Lafarge’s plants and they had to stop production for few months to rectify that.
“So, as that had happened, the supply from Lafarge reduced by about 25 per cent in Ogun State. Also, one of the plants of Dangote Cement had a technical issue and briefly, they couldn’t load. But that has been resolved.
“But because that took about one month, the price of cement went up to about N4,000, from N2,800.”
He added: “Even though this cement policy is a good one, it must be done in such a way that a lot of players must come in and participate. There is no point in making a policy that only one, two, or three people are able to benefit from that policy,” he said.
Chairman of BUA Group, Abdulsamad Rabiu
“That does not make sense. I am benefiting from this policy, but I know it is a bad policy. So, whilst the policy is good, the way it is being administered is not good. You can’t have a policy that restricts so many people from participating, at the end of the day, you are just creating a monopoly.”
According to Rabiu, there are other companies that have the capacity and access to funding to be able to compete in the industry in Nigeria, adding that the entire country is sitting on limestone.
“Anywhere you go, there is limestone in Nigeria,” he emphasised and noting that “the cost of production is probably the lowest in Africa.”
He said the few players in the industry, “are making so much money in the industry and Nigerians are the ones paying for this. I am part of it, but I know it is wrong.”
Rabiu noted that the same thing is presently happening in the sugar industry, with the Backward Integration Programme (BIP).
“In the sugar industry, you have a situation where you have only three players and there is the BIP policy, which states that unless you are seen to be doing a plantation you would not be allowed to do sugar refinery.
“Again, it is the same kind of policy where few people are benefiting and 200 million people are suffering. The business is doing well, we are making money, but how much money do you really need.
“We have 200 million people and they are paying more than what other countries are paying for something that ought to be cheaper.
“Today, I am ready to reduce my cement and sugar prices, if other companies are ready and I challenge them. If you are posting 50 per cent as profit, and Nigerians are paying for that, why can’t you make 25 per cent profit, so that instead of N4,000, they would be paying N2,000 per bag of cement, and it can happen,” Rabiu said.