Dike Onwuamaeze
The Centre for the Promotion of Private Enterprise (CPPE) has cautioned the members of the House of Representatives against comments that could give a bad name to manufacturers of cement and incite Nigerians against them.
It gave this warning yesterday in a public statement captioned “CPPE Expresses Concern over Comments by House of Reps Members on Cement Manufacturers.”
The statement, which was issued by the Chief Executive Officer of CPPE, Dr. Muda Yusuf, described recent deliberations on the floor of the House of Representatives where members alleged that the manufacturers were arbitrary and exploitative in fixing the price of cement as a bad precedent, especially when the manufacturers had not been given the opportunity to present their own story to the House.
Muda said: “Some of the remarks by the honourable members at the session were capable of inciting the public against the cement manufacturers and putting their huge investments at risk.
“We should not give our cement manufacturers a bad name. It is a dangerous thing to do given the huge stake they have in the Nigerian economy. We plead with the leadership of the house to ensure moderation in the use of language to avoid adverse consequences for investors in the economy.”
According to him, “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. It should not just be about emotions and sentiments.”
Yusuf stated that such commentaries represented negative signaling to investors for an economy like Nigeria’s that is seeking to industrialise, attract investors and create jobs.
He noted that the comments were painful because the major players in the sector are indigenous companies who are making giant strides amidst a very difficult operating environment, including the multitudes of macroeconomic and structural headwinds.
“The business of manufacturing is 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 per cent of the nation’s GDP and 90 per cent of the employment, and over 80 per cent of the revenue to government.
“They deserve to be treated 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,” Yusuf said.
The CPPE observed that cement production is highly energy intensive with gas, which is priced in dollars for manufacturers in the country, being the major energy source.
This, it noted, “is a major predicament for domestic manufacturers. The implication of that for production cost is better imagined, especially in the light of the plunge in the value of the naira.
“The logistics cost of cement distribution is humongous, given the escalating cost of diesel and the state of the roads. Exchange rate depreciation is taking a huge toll on the cost of imported components of production inputs, including spare parts and machineries. Cost of fund is mounting as the CBN continues its aggressive monetary policy tightening. Latest headline inflation for February was 31.7 per cent.
“All these are variables that are not within the control of the manufacturers and which have profound impact on production and operating cost.”
Yusuf, however, admitted that the risk of profiteering is possible given the oligopolistic nature of the sector.
“This risk exists in the Nigeria cement industry as there are few dominant players. But this is a regulatory issue located within the framework of the Federal Protection and Competition Act of 2018.
“The Federal Competition and Consumer Protection Commission (FCCPC) has a responsibility to ensure compliance with the Act to ensure the protection of the interests of the consumers and the public. If there are proven lapses in this respect, the FCCPC should be held to account.
He also noted that the current ex-factory price of cement by the major players is less than N7,000 per bag and pointed out that the real culprits might be within the cement distribution chain over which the manufacturers have limited control.
