NIOB Condemns Hike in Cement Price


Bennett Oghifo

The Nigerian Institute of Building (NIOB), has said the astronomical rise in the price of cement in Nigeria and the low purchasing power of Nigerians promote temptations to tamper with quality in construction work.

The National President, Nigerian Institute of Building, Bldr. Kunle Awobodu, FNIOB, said this in a statement, urging the government to “step in quickly and save the nation from imminent danger of substandard building construction.”

The body of builders said Nigeria is a country that is blessed with population, intellect and resources. The population can be a strength or a liability depending on how resources are managed. For investors and manufacturers, the population presents a large market for their products. For citizens, the population presents a raison d’etre for crash in prices because of the law of large numbers.

The recent increase in the price of a 50 kilogram bag of cement from around N2,600 to N3,500 and beyond portends a bad omen for the construction industry and the nation at large. Whatever the underlying reasons given for the hike in price, the NIOB is actuated by altruism to bring the attendant or unintended consequences to the limelight so that stakeholders can appreciate and respond to the emergency that the nation is confronted with.

Even at previous prices, before the hike, Nigerians were confronted with the challenge of owning their homes and developing other infrastructure. Reports of ‘cutting corners’ due to compromised material inputs abound. Sandcrete blocks, concrete and mortar are products in which cement is part of the inputs for their production. These products also play a major role in the cost and strength of structures built with them.

While we are not sanctioning ‘cutting corners,’ that is, compromise on standard, the present price increase will only exacerbate an already volatile and precarious situation. It will increase the need for more vigilance and policing of the construction processes. As an analogy, a country with sub normal conditions of living will battle with more crimes with the implications of spending more to police the society. It thus pays more to invest in improving the quality of living to reduce predisposition to crime. Price increases in the inputs of construction without corresponding increase in citizens’ purchasing power will reduce activities in the construction sector that are meant to rejuvenate the economy. This will translate to loss of jobs and its inter linkages. Where there is even activity, especially in the informal sector, risks are multiplied.

Construction contracts in a regime of skyrocketing and unstable prices will witness many fluctuation claims with the potential for disputes and project abandonment. A cycle of project failures may start when prices are beyond the reach of clients and developers.

While it may be rationalised that the Covid-19 induced lockdown did not make the manufacturing sector produce (partly or fully) for some time and that increased construction demand after the lockdown has contributed to hike in cement prices, the argument cannot be a justification for such price increases. Virtually all the material inputs for cement production are available locally. All the cement manufacturing plant have been existing in Nigeria before the lockdown. We acknowledge that there may be need to maintain and repair, it is our view that this, however, is not enough justification for the astronomical increase in cement prices.

We acknowledge that cement manufacturers operate in the Nigerian economy. Nigerians, who use cement products also are in the same setting where macroeconomic variables of interest rate, exchange rate and inflation have diminished purchasing power. The onus, therefore, lies on the government to urgently address these macroeconomic issues to favour the overall economy and, especially the construction industry that has the potentials to stimulate growth. The cement manufacturers too should take advantage of population to crash costs while government should further address transportation and energy concerns. If these price increases and other macroeconomic variables are not addressed, the vision of housing many homeless Nigerians and the nation’s infrastructural revival will remain a mirage.