Housing firms, developers reject N8,000 cement price | Prestige Real Estate News

Developers and housing firms have rejected the decision by cement manufacturers and the Federal Government to peg cement price at N7,000 or N8,000 per bag, saying such price is not sustainable for the growth of the sector.

Cement manufacturers and the Federal Government had met in Abuja on Monday after the price of the product soared to between N13,000 and N15,000.

The increase was linked to smuggling, high import duty, foreign exchange crisis, among others.

However, in an exclusive interview with The PUNCH, the President of the Real Estate Developers Association of Nigeria, Dr. Aliyu Wamakko, said the newly proposed price was not good for the economy.

He said, “I do not think that is good for the economy of this country because cement constitutes the primary product for any building construction to be done.

“The Chief Executive Officer of BUA Cement, Abdul Samad Rabiu, promised Nigerians that by January 1, 2024, the cement price would be slashed to N3,500, so what is the problem? According to him, most of the components of cement is sourced locally.

Expressing concern, Wamakko said,  “Why should the price be reduced to N8,000? Anything above N5,000 is not beneficial for the economy and it would not bring any positive impact towards the reduction in the 28 million housing deficit.

He noted that the price should be brought down to N5,000 for any meaningful development to be achieved in the sector.

He added, “At N8000, most of the building projects in the country would not ne completed. There must be a review of abandoned buildings all over the country, most especially the ones in 2023.

“90 per cent of cement is sourced locally, so I do not understand why the cement should go up to that price.”

In a similar vein, the Executive Secretary, Association of Housing Corporation in Nigeria, Toye Eniola, condemned the new price.

He said, “What is fair in N7000 to 8000, when BUA promised us a slash from over N5,500 to N3,500 per bag of cement; and now they are negotiating 8,000? Where are we heading to?

“That negotiation is for the rich, what they are saying is with that the price housing is going not to be for the poor, with that price there is no poor man that would be able to afford it and it would keep widening the deficit gap.””

He added, “The way forward is to go back to the basics, this is the time to embrace local building materials, for instance we have interlocking blocks and we require about five per cent of cement for this which would save us a lot of money, Nigerian Building and Road Research Institute has done a lot of research on alternative building materials that can be used in Nigeria, for instance they have done research on the use of bamboo as an alternative to iron rod.”

Eniola asserted that it was high time the country began to embrace local building materials as opposed to imported ones.

Also, the Chief Executive Officer, Cromwell Professional Services International Ltd, Sola Enitan, said the new price was bad.

He said, “The reduction is still not it, the manufacturers may think they are saving people money, but it is all bullshit as far as I am concerned.

“In one month, cement moved from N5,000 to N8,000, I believe that the government would begin to feel the pinch further, because the cycle goes round.”

According to him, if people are not able to build new houses, and there are rent hikes, the later part of 2024 and 2025 will be very harsh.

Meanwhile, the Chief Executive Officer, Octo5 Holdings, Jide Odusolu, queried the slash in cement price earlier promised by BUA cement.

He said, “BUA made audio promises, I would like to see who or where they supplied cement at N3,500 per bag – we never got it and we tried!

“Low income earners ought to benefit from government funded (not built) social housing stock.”

Odusolu noted that his greater worry related to the cause of the spike.

He added, “Reading the post-meeting report, it would seem they blamed the cost of gas, bad roads, and cost of transport. Personally, the only new element that is possibly defensible is the gas cost.

“The government should engage Nigerian Gas Company and other gas producers to design a mechanism for bench marking gas for local use in naira.

“It makes no sense that a nation that still flares gas in 2024 still makes it too expensive.”

It was earlier reported by The PUNCH, that Cement Manufacturers had on Monday agreed to sell a 50kg bag of cement at a retail price between N7,000 and N8,000, depending on location nationwide.

Meanwhile, the Manufacturers Association of Nigeria has warned the Federal Government against a clampdown on cement manufacturers following a surge in the price of the product in recent weeks.

The Director-General of the association, Segun Ajayi-Kadir, gave the warning during an exclusive interview with The PUNCH.

While speaking on the cause of the significant jump in cement prices, the MAN DG noted that manufacturers were battling unprecedented spikes in operating costs.

He recommended that the whole cement value chain be looked into to be able to address the increase.

He said, “The escalating cost is not only visible in cement,  so we are speaking with the government informing them that the cost of doing business in Nigeria is too high, except the government brings down these things, we would always have an escalating cost.

“We have been constantly engaging the government in this regard and they are promising to address the issue. However, the increase in cement implies that it would badly affect the construction industry, it would also negatively impact the capacity of people to do business to build, which is not good for our national development unless the government takes immediate action.

“I must warn that the approach is not to clamp down on wholesalers, and shops, asking them to reduce their prices, everybody is going to the same market, the government needs to reduce the ease and the cost of doing business, and stop the crazy imposition on wanting to bring down prices, it will not work, but only lead to scarcity.”

According to Ajayi-Kadir, the way forward is to reduce the input cost of production and engage with the stakeholders to understand their cost structure and the reason for the hike.

Meanwhile, the National President of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture, Dele Oye blamed the lingering forex crisis for the jump in the price of cement.

He said, “While local production capacity is a critical factor, we cannot overlook the significant impact of the depreciating value of the Naira. The current exchange rate exerts inflationary pressure on input costs, thereby affecting overall food prices.

“To counter this, a robust economic policy aimed at defending the Naira to reach an acceptable exchange rate of 750 Naira to one USD is essential. Hence, the government has to fix the naira to fix everything.”

• PUNCH