A few days ago, the Minister of Works, Dave Umahi, told Nigerians that President Bola Tinubu had directed cement manufacturing companies to go back to the status quo as regards the price of the commodity.
Umahi revealed this when he inspected a new cement factory in Sokoto alongside former Governor Aminu Tambuwal.
He had said: “On the issue of pricing, I can authoritatively say that they can still do better in line with their discussion with Mr. President. “Mr. President insisted that they should go back to the status quo as far as cement price is concerned for the common man. I want to encourage them to abide by the directive of Mr. President so that we can achieve a massive housing programme and the renewed hope agenda of concrete roads by the President.”
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A few weeks ago, the same Minister announced to the world that following his meeting with cement manufacturers, a bag of cement should not be sold beyond N7,000 and N8000. He had summoned the manufacturers to Abuja for a meeting following the skyrocketing price of the essential commodity. Currently, a bag of cement is sold between N10,000 and N15,000.
Of course, it is understandable why the Minister may not be able to sleep well because of the high cost of the commodity. Number one, since his assumption of office as minister, he has become an advocate of the use of cement concrete for construction of roads. A commendable move considering the result the country is getting, But is it enough to browbeat manufacturers to sell below their cost price?
According to Minister Umahi, during his meeting with the manufacturers, he was the same person that reeled out the condition they (manufacturers) gave before they could cut down the price of the commodity. He said various challenges such as smuggling, terrible roads, high energy costs, and the forex crisis contributed to the high pricing.
So when he mentioned the above just some weeks back without any action by the government to the challenges identified, questions were naturally raised on how fair it is to insist that “manufacturers have shown their willingness to reduce prices in the future”.
In Nigeria today, there is no major or minor manufacturing industry that is running on public power supply. Everyone burns diesel 24/7. And a litre of diesel for a long time now has been selling for over N1,000, having become one of the first petroleum products to be sold unregulated. It was therefore no surprise that since the so-called meeting with the manufacturers, no change has happened to the high energy cost borne by the manufacturers. Manufacturers burn tonnes of diesel day and night to produce cement because of the total breakdown of public power supply.
Apart from the factory price, the bulky commodity has to be transported and the trucks use diesel in distributing the product all over the place. The distribution chain is quite expensive and arduous. What of the terrible condition of the roads? Most Nigerian roads are more or less death tracks, especially for heavy duty automobiles. Nigeria is reputed with a very bad road network and these are the tracks that the distribution trucks traverse to get the commodity to end users.
Ordinarily, a good rail system is by far a cheaper alternative. With a good rail system, cement would be distributed far cheaper. In fact, a single cargo train is capable of taking off a good number of trucks that ply the roads.
So since the meeting between the minister and the manufacturers, has the government found a solution to the frustrating energy crisis? No. What of the state of the roads, has anything been achieved to change the story by the government? No.
The forex crisis has been so alarming. A dollar has exchanged for as high as N1,700 and it is not even stable beyond 24 hours. Yet manufacturers work under this condition. So, how fair is the minister to tell the whole world that the President has given directives that cement manufacturers should beat further down the price of cement? Is that how an economy is run? By fiat?
The Minister should exercise caution so that he doesn’t inadvertently incite the people against cement manufacturers who are trying their best to provide services under a very bad condition. Now when a Minister says the President has given a directive that cement should sell at an amount and the citizens then go to the market to meet such a product twice the amount quoted, what will be the reaction of the average buyer in such circumstances? What if they so much believe the directive of their President and see the manufacturers as ‘greedy, wicked shylocks’ and decide to deal with them?
Minister Umahi should take caution before some enraged consumers take it out on manufacturers, thus setting them and their investment up for destruction. Instead of appreciating their efforts in providing services under a very difficult business situation, some people who have listened to the minister that the president had already given instructions that cement prices should be reverted to old rates may see them as ‘wicked business men who are only interested in making money from the poor without mercy. They may decide to target their business interests all over the place like their offices, trucks, etc.
It is a fact that no Dangote or BUA would manufacture cement and then say this is how much they want to sell without calculating every cost that goes into manufacturing and distribution as a businessman. It is never done. Even at the time BUA promised to sell cement at N3,500, it was for the buyers to pick the commodity at its factories and not at the point of sale.
And the minister, having even been governor at a time, should know better. He is expected to understand when they say an executive has given a directive, he should know the consequence of flouting such a directive. It is not fair for the minister to blackmail the manufacturers and make them seem like shylock before an average cement buyer.
The other time, a fellow Minister threatened that if cement manufacturers stick to their “high” price, the government would not hesitate to open its borders and import cement to flood the market, which would force the local manufacturers to succumb. This is not how an economy is run.
Before issuing threats, directives, summoning people to Abuja, the government should do the needful. Authorities should provide the enabling environment for businesses to thrive. The market everywhere in the world behaves the same way: While supply drives demand, the price of a product is determined importantly by the various costs of producing the item and distributing it. There is no magic in any executive directive like the one Umahi is trumpeting around.
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