By Jerry Uwah
[email protected] 08051000672 (text)
Nigeria, the largest economy on the Dark Continent, has a housing deficit of 16 million units. That explains why thousands shelter under bridges and uncompleted buildings in the sprawling cities. The rulers of the land would rather “deport” the homeless to their doom in impoverished rural communities than tackle the yawning housing deficit.
Millions of Nigeria’s homeless people are now endangered species in their own country. Lagos State is registering residents in what would give them the equivalent of resident permit. The homeless cannot register under the scheme because they cannot provide utility bills as prove of having a place of abode. They would eventually be chased out of the mega city.
The truth, however, is in what the late reggae maestro, Lucky Dube said in the lyrics of one of his popular hits: “If you are not building schools, you must build prisons.” The rulers of Nigeria are not building residential houses for the country’s teeming population of homeless, so they must build prisons.
Government is not encouraging those who can afford to provide roofs over their heads to do so. Cement, a key building material, has been priced out of the reach of the large army of Nigerians in the low income bracket.
Last week the price of a 50 kilogram bag of cement was sailing perilously close to N2, 500 despite the glut in the market. Sometime in 2013, Dangote Cement, the single largest producer of cement in the country, shut down its plant in Gboko, Benue State on claims that there was cement glut in the country.
However, even as Dangote shut down its plant in Gboko in a veiled attempt at arm-twisting the federal government, the price of the product still hovered around N1,700 per 50 kilogram bag.
Something is terribly wrong with the price mechanism of the Nigerian cement market.
It has brazenly defied Campbell McConnell’s theory of the “invisible hand on the price mechanism”. The erudite American economist described the forces of demand and supply as the “invisible hand on the price mechanism”. When supply exceeds demand, the invisible hand pushes down the price. When demand exceeds supply the hand pushes up price.
The Nigerian cement market has defiantly remained a sellers’ market despite the obvious glut.
About five years ago, the owner of one of the firms at the fringes of the cement industry appealed to the federal government to lift the ban on the importation of bulk cement and grant him licence to import the commodity and flood the market. He promised to drive down the price of the product to less than N1, 000 per bag.
The industrialist vowed that the production cost of a 50 kilogramme bag of cement was N400, and that there was no reason why the price of the product should be above N900.
The federal government granted his request, but the price of cement kept heading for the stars.
Last week David Iweta, the president of Cement Producers Association of Nigeria (CPAN), took the campaign from where the industrialist stopped. In a letter to the presidency, which was leaked to the press, Iweta said Nigerian cement manufacturers can sell the product at N500 per bag.
Iweta argued that the price of cement in Nigeria was 300 per cent higher than what obtains in Egypt, China, Taiwan, India, Japan, Norway, Turkey, Indonesia, Pakistan, Iran and Iraq.
Nigerian consumers of cement may not be interested in how the product sells in Japan, Norway and Turkey. These are countries where power supply, a key component in the production of cement, is taken for granted.
However, many are keenly interested in Iweta’s claim that cement sells for the equivalent of N500 in Egypt, India, Pakistan and Iraq. These are countries that share Nigeria’s infrastructure deficit. Ironically, manufacturers of cement in these countries are able to sell at the equivalent of N500 and still make profit.
Perhaps the most disheartening claim in Iweta’s letter to the presidency is the allegation that cement manufacturers make a profit of N500 per bag. With the production cost of cement estimated at N400 per bag, they must be raking in a minimum of 125 per cent profit. It is a callous act of profiteering.
The federal government has unfortunately left the hapless consumer of cement at the mercy of manufacturers. The profiteering in the industry is at the root of Nigeria’s debilitating housing deficit. Only the rich can build at the current price of cement. The government is not making any effort to keep the price of building materials affordable.
The level of profiteering in the cement industry could be assessed from the intimidating posture of cement companies in the capital market. Last week, the share price of Dangote Cement Plc in the Nigerian Stock Exchange (NSE) was above N230. It accounts for almost 20 per cent of the N12.6 trillion capitalization of the NSE. The share price of Lafarge, the hitherto poor performer and distant second in the industry, surged from N27 to N112.
The losers in the winner-takes-all game are the homeless Nigerians whom the governments prefer to “deport” from city slums to their ultimate death in impoverished rural communities.
