Abuja, Nigeria — Abdul Samad Rabiu, Chairman of BUA Cement, has attributed the soaring cost of cement in Nigeria to the exploitation of consumers by middlemen within the supply chain. Rabiu revealed this during the company’s 8th Annual General Meeting held recently in Abuja.
According to Rabiu, BUA Cement had sold over a million tonnes of cement to dealers at a controlled price of N3,500 per bag in 2023, with the intention that the benefits of this lower price would be passed on to end-users. However, he disclosed that dealers instead sold the cement to consumers at inflated prices ranging from N7,000 to N8,000 per bag.
“We were selling cement at N3,500 with the expectation that dealers and retailers would pass the benefits of the low price to end-user customers, but some were selling at N7,000 and N8,000 per bag, making a lot of money from the very high margin,” Rabiu said. “I think we sold more than a million tons at N3,500 before we realized what the dealers were doing.”
In light of these activities, Rabiu explained that BUA Cement had to discontinue its low-price policy, as the company did not intend to subsidize dealers who were capitalizing on the significant price difference to maximize profits.
Rabiu also pointed to the broader economic challenges faced by Nigeria, including the devaluation of the naira and the removal of the fuel subsidy last year, as contributing factors to the unsustainability of the low-price policy. “Because of the issues Nigeria faced at the time, such as the devaluation of the naira and the removal of the fuel subsidy, we could not continue that policy,” he added.
The rising cost of cement has been a major contributor to Nigeria’s housing crisis, with the International Human Rights Commission reporting that over 28 million Nigerians lack access to decent and affordable housing. The average price of cement, which stood at N4,300 per bag in May 2023, has surged to between N7,500 and N8,000 per bag as of May this year, representing an increase of up to 86.05%.
The recent surge in housing costs has raised concerns among experts that more Nigerians may be forced to live in substandard conditions. Property owners, facing rapidly increasing rental fees, might resort to occupying unfinished buildings without essential amenities, exacerbating the issue of inadequate housing.
Quantity surveyor Adekunle Ebenezer of Anchor University, Lagos, noted that building materials account for 50-65% of construction costs, and with the current surge in prices, developers will inevitably pass these costs on to buyers. “Once the cost of building materials goes up, the construction cost will also increase,” Ebenezer said, adding that this trend will lead to higher rental and sales prices.
Ebenezer also warned about the potential rise in unsustainable buildings, stressing the need for a holistic approach to material selection that considers economic, environmental, and social factors. However, he highlighted the challenges of producing sustainable building materials locally due to high importation costs, inadequate technology, and the ongoing energy crisis.
Sadiq Abubakar, President of the Council for the Regulation of Engineering in Nigeria (COREN), linked the frequent building collapses in the country to the arbitrary increase in cement prices by producers. Abubakar stated this in May during an investigative hearing organized by the House of Representatives Joint Committee on Solid Minerals, Industry, Commerce, and Special Duties, which was set up to probe the recent price hikes in cement.
“You will agree with me that an increase in the price of cement is one of the key culprits of building collapse,” Abubakar remarked. He emphasized the connection between the hike in cement prices, the standardization of building materials, and the direct link to structural failures.
As the Federal Government continues to implement measures aimed at addressing Nigeria’s housing deficit, the ongoing challenges in the cement industry underscore the need for more stringent regulatory oversight and a reevaluation of policies that can ensure affordability and quality in the housing sector.
