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Cement war has helped shatter monopoly

cementAn important development in our cement industry has been the introduction by government of price deregulation, to neutralise local producers’ market monopoly and incidents of cement shortage.

Local producers had captured the lion share of the market and had made the greatest impact on retail prices, but when Dangote and other foreign firms jumped in, change has arrived.

The boom in cement consumption is anchored on economic and infrastrure growth in Ghana. Increase in population has led to demand in housing, offices, schools, shops and other concrete structures.

As the Ghanaian cement market continues to grow strongly, with producers working assiduously to meet demand, it became appropriate for government to deregulate cement prices for a healthy competition.

However, the Association of Cement Manufacturers of Ghana (CMAG) has fingered government for approving licences for some foreign firms to import cement into the country.

The association accuses Mr Ekow Spio Garbah, the Trade and Industry Minister, of acting illegally by issuing the cement import permits. The GCMA stated that the Trade Ministry has given permit to a Chinese firm to import 500,000 tonnes of Portland cement without the approval of the Cement Monitoring Committee established by government.

Mr Ekow Spio Garbah has refuted their claim, saying: “Government did a thorough job before passing the Legislative instrument which empowers the Ministry of Trade to regulate the cement sector.

The cement manufacturers, some of whom have had the monopoly situation for close to 30 or more years, are not used to competition and their natural reaction is to run to the media and throw a lot of dust in the air to make it seem as if somebody is doing something wrong,” he added.

Cement is a primary product needed in every concrete structure. Ghana is challenged by infrastructural deficit hence having prices of cement down is a major breakthrough. The bid to ensure rapid infrastructural development of the country may be the reason the increasing demand for cement at an affordable price has to be met.

Government has, perhaps, acted wisely to preserve the market. With the tumbling economic climate that Ghana finds itself in, as well as firms been hit by growth spurt, local cement producers causing cement shortage and hiking prices on the market could well have been anticipated.

Dangote cement’s arrival in the country from Nigeria has been crucial for the Ghanaian market. The Nigerian oligarchs’ firm, which is Africa’s largest producer of cement, has taken the competition tussle a notch higher, following its reported decision to slash prices down. Dangote’s competitive price offer has resulted in a gradual decline in the price of cement in Ghana.

From a Ghanaian consumer perspective, no period have we enjoyed having varieties of cement on the market and at a competitive price than now. Swelling supplies from producers is the reason prices have remained stable. It is an indication that deregulation and entering of the market by foreign firms have terminated local producers market monopoly.

Of course, we understand local producers claim that importers have created a glut in the market. The worry is that it may create unemployment. We don’t want to see thousands lose their jobs since the country is already engulfed in a high unemployment rate.

Nonetheless, consumers careless since price competition has created extra cash in their pockets. Cement constitutes a large share of a building cost; therefore, the effort by government to make cement more affordable for the ordinary Ghanaian is a major boost for the economy.

The situation where one player – local producers, could dictate the price of cement was not the best for a sustainable growth of the Ghanaian economy. This is why we need to laud government’s decision to deregulate the cement market to make it all embracing and to present consumers with options.

Indeed, in as much as we would also ask government to create more good business ambiance for all to thrive in the industry, the on-going cement war is good for Ghanaian consumers and the deregulation is a moral decision that has broken monopoly.

Source: B&FT

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