Housing deficit: Disquiet as cement price soars

Cement is a key component  in  building  and construction sector and any time the price goes up it usually creates a  noticeable impact in the sector. High demand for cement is fueled by increasing demand for home ownership and infrastructural development. So, when the economic recession facing the economy took its toll on the  price […]

Cement is a key component  in  building  and construction sector and any time the price goes up it usually creates a  noticeable impact in the sector.
High demand for cement is fueled by increasing demand for home ownership and infrastructural development.
So, when the economic recession facing the economy took its toll on the  price of cement last week  manufacturers the increased the price by 44 percent with a bag now selling for N2,300. The construction sector players have called  for the  reduction of the price.
Cement Manufacturers Association of Nigeria (CMAN) said the increase was made to meet up with their production costs.  With the increase, retail prices have jumped from N1, 600 to N2, 300 depending on location.
 However, analysts are of the view that the increase in cement price is a setback for low-income prospective homeowners, creating   crisis in the construction sector as it would lead to upward reviews of contract sums.
 They also noted that it would lead to delay in new and on-going projects between contractors and their clients until there is agreement on the contract variations.
 Vice president, Nigerian Institute of Building, Kunle Awobodu described the development as a sad one for builders and prospective home owners, adding that the increase would put Affordable or Low Cost Housing Programme of the government in jeopardy.
 It was gathered that the hike is due  to  dwindling capacity utilisation of cement manufacturers plants due to disruptions in gas supply;  high cost of Automotive Gasoline Oil (AGO), known as diesel; inability to access foreign exchange , high cost of production and poor electricity supply and tariff hike.
 Alime Godwin who is a major retailer of cement told Daily Trust that  the sharp increase  in cement  price  has led to low sales as dealers  are counting their losses.
 He said that as a major supplier of Dangote cement, the increase is making  most of  the  customers to stay away as they  were not prepared for the new price.
 He said, “Most of my construction clients have stopped work to review their budget and it is making things difficult.  Before now  an average of seven persons make purchases in various quantities but since the new price hike, I can barely manage two a day. It is a really terrible development.”
 He urged the cement manufacturers to embark on adequate publicity  for buyers of cement to be properly informed of the new price regime, saying most buyers usually get to know at the point of purchase.
Another cement dealer,  Uzo Uzodinma called on the government to prevail on major cement manufacturers to bring cement prices down to prevent total collapse of the building and construction sector.
  He lamented that in the five years that he has been doing the business, the recent increase remains the sharpest as it was not introduced bit by bit.
He said,  “ For an average businessman in the cement sale, their sales forecast has been grossly affected. In a country with 27million housing deficit, price hike in cost of cement is just not acceptable as it tends to widen the gap further.’’
 Mustapha Hassan who loads and offloads cements into trucks for buyers  in Utako district of Abuja  complained  of lack of jobs to do for a week now.
 “We have been idle for a week now and could barely feed as a result. People are not buying cement because of the price hike and as such we cannot make any money. Before now, I  make at least  N3000 loading trucks daily. Government should help do something about it,” he said.
Kolawole  Oladoye, an Abuja based  real estate agent, expressed fear that the new price would  discourage prospective land developers and lead to increase in  house rent and home acquisition. He also observed that the increase would lead to more abandoned projects as both government and individuals would have to spend more on initial budget and in a situation where  funds are now readily available the projects would suffered abandonment.