Business
Galloping cement price threatens Tinubu’s housing policy
Nigeria’s huge housing deficit may not be abating anytime soon if nothing drastic is done about the price of cement, which has hit the roof in the last few weeks.
This is happening at a time President Bola Tinubu, has commenced practical expression of his administration’s desire to implement a New City Development Plan under the Renewed Hope Agenda.
The Federal Ministry of Housing and Urban Development has consistently highlighted the country’s housing deficit, which currently stands at over 28 million, according to the Federal Mortgage Bank of Nigeria, and World Bank.
President Tinubu, recently performed the groundbreaking of the 3,112 housing-unit Renewed Hope City in Karsana, Abuja, and reiterated his administration’s resolve to provide decent and affordable housing for Nigerians.
The project is a part of 20,000 housing units to be delivered in the Federal Capital Territory under a Public Private Partnership (PPP) arrangement being implemented by the Federal Ministry of Housing and Urban Development.
Tinubu had earlier authorized N100 billion for the Ministry of Housing and Urban Development in the 2023 Supplementary Budget and allocated N18.9 billion in the 2024 budget for the execution of the Renewed Hope Cities and Estates, alongside Urban and Slum Upgrading programmes.
The Renewed Hope Cities and Estates Programme is a component of a PPP project established in December 2023 between the Ministry and a consortium of companies, namely Continental Civil and General Construction Limited and Ceezali Limited. This collaboration seeks to construct a total of 100,000 housing units nationwide.
Although cement manufacturers have agreed to sell a 50kg bag of cement at a retail price between N7,000 and N8,000, depending on location nationwide, they said the price drop from the current market price would depend on the fulfillment of certain government interventions to ameliorate critical challenges faced in the industry.
The Minister of Works, Dave Umahi, who announced the development after a meeting with leading cement manufacturers on Monday in Abuja, said Nigerians would feel the impact of the resolution in 30 days.
The meeting was against the backdrop of the skyrocketing price of the commodity to approximately N13,000 in several retail stores in the Federal Capital Territory, and Enugu, indicating the impact of inflation within the country.
However, there are concerns that even with cement manufacturers accepting to shift ground, other factors beyond their control, which are also driving price escalation may still continue to pose serious threats.
Speaking at the meeting with the Works minister, the Group Executive Director of BUA, Kabiru Rabiu, who disclosed plans by the company to supply six million tonnes of cement into the market to mitigate the surging prices, regretted that mischievous retailers are smuggling the product to neighboring countries to gain from higher price there.
He said: “BUA is committed to bringing in an additional six million tonnes of cement in the next few weeks and that would seriously dampen the pressure of supply. We would remain committed to these engagements and we would reassemble in 30 days.”
“The high cost of cement in neighbouring countries has made smuggling lucrative. The cost of cement in Chad and Cameron is about N15,000 per bag and we noticed that distributors through the North Eastern part smuggle products to neighbouring countries. They do that not through official channels and the government is not benefiting from their export. Unless that is sorted, we’ll continue to have pressure from those markets.
“There is a big disparity between demand and supply in Nigeria. I think some plants have issues, which have reduced production. We are at the peak of cement demand but supply seems less, so there is going to be a crisis and that is why we are working hard to bring more products to the market to reduce the pressure of demand and supply in the market,” he concluded.
Another question mark analysts see on the commitment of the President to the housing policy is the recent appointment of his son-in-law, Oyetunde Ojo, as the Managing Director of the Federal Housing Authority (FHA).
Tinubu appointed Ojo alongside Shehu Osidi, who is to head the Federal Mortgage Bank of Nigeria (FMBN). The appointments, according to presidency sources, is part of the reconstitution of the executive management teams of parastatals under the Federal Ministry of Housing and Urban Development.
Reacting to the appointment, a real estate market advisor and consultant, Olufunso Adebayo, noted that FHA is not an agency that should be treated with the kind of appointment the president has made for its managing director, stating that the housing authority has low performance burden on its shoulders.
“If anything, the FHA needs an experienced housing professional to turn its fortunes around. In the last 50 years of its existence, FHA’s performance has been sub-optimal. It needs someone, who will make it truly a housing delivering agency of government, not a favoured child that will handle it like a family business,” he said.
President of Real Estate Developer’s Association of Nigeria ( REDAN), Dr. Aliyu Oroji Wamakko, has said the recent increase in prices of cement is further threatening infrastructural development and worsening the housing deficit in the country.
Wamakko said, “The increase in prices of building materials is compounding the woes of the housing sector. We want the Federal Government to initiate policies that could ameliorate challenges, especially those fostered by exchange rate to boost supply and accessibility to affordable housing
“And again, in active construction sites in Lagos, Ogun, Port Harcourt, Kano, Abuja, Anambra, and Oyo states, the high price of essential materials is impacting project schedules, thereby slowing down construction activities. Many are abandoning sites waiting for better days. Developer, who had expended N50 million to construct a building last November, would end up spending about N100 million for the same type of project due to inflation.”
Corroborating the REDAN President’s concerns, a builder at Akute, in Ogun State, Mr. Taiwo Idris, told our correspondent that work had been suspended in almost all the project sites that he knows in different parts of Akute and Lagos.
”Every building project I know has been suspended. Who wants to buy a bag of cement for N15,000?…Idris queried.
However, reading the communique after a three-hour discussion, Umahi said certain issues including smuggling, bad roads, high energy costs, and the forex crisis caused the high prices but stressed that manufacturers had expressed their readiness to be willing to bring down the prices in the future.
“The meeting discussed extensively the current prices of cement vis a vis the challenges from the manufacturers. They talked about their challenges ranging from the high cost of gas, high import duties for their spare parts, bad road network and, of course, the high FX rate.’’
But a public affairs analyst, Mr. Peter Dike, told Business Hallmark that the only lasting solution the soaring price of cement is to end the monopoly in the industry.
“Unless government opens up the businesses for other people to come in so there will be serious competition, Nigerians will remain at the mercy of Dangote, BUA and Lafarge, who currently determine both price and quantity of cement in the market”, Dike stated.
