Abdul Samad Rabiu, Chairman of BUA Cement, has attributed the skyrocketing cost of cement in Nigeria to the exploitation of consumers by middlemen within the supply chain. Rabiu made this statement during the company’s 8th Annual General Meeting held recently in Abuja.
Rabiu disclosed that despite BUA Cement’s policy to sell cement at a controlled price of N3,500 per bag throughout 2023, intermediaries inflated the prices, leading to consumers paying as much as N7,000 to N8,000 per bag. “We sold over a million tonnes of cement at N3,500 per bag, expecting dealers to pass on these benefits to end-users. Instead, they sold it at nearly double the price, making substantial profits from high margins,” Rabiu lamented.
He further explained that the company was forced to discontinue its low-price policy as it was not sustainable under these circumstances. The devaluation of the naira and the removal of the fuel subsidy also contributed to the decision. “We intended to keep prices low for consumers, but with the dealers’ refusal to adhere to our pricing, and the economic challenges, we could not continue subsidizing dealers,” Rabiu noted.
The cement price surge has exacerbated the housing affordability crisis in Nigeria, where the housing deficit remains a significant challenge. The International Human Rights Commission reported that over 28 million Nigerians lack access to decent and affordable housing. The recent surge in cement prices, from an average of N4,300 per bag in May 2023 to between N7,500 and N8,000 in May 2024, has worsened the situation, leading experts to warn that more Nigerians may be forced to live in substandard housing.
Quantity surveyor Adekunle Ebenezer from Anchor University, Lagos, noted that building materials account for 50-65% of construction costs, meaning the rise in cement prices would inevitably lead to higher costs for buyers. “Once the cost of building materials goes up, construction costs will follow, and developers will pass these increases on to buyers,” he explained.
Ebenezer also raised concerns about the growing use of substandard building materials, as developers seek cheaper alternatives amidst rising costs. “Choices of building materials should consider environmental and social factors, not just economics. However, sustainable materials are often expensive due to importation costs, and local production is hindered by the energy crisis and lack of technology,” he added, warning that this could lead to a proliferation of unsustainable housing units.
Similarly, Sadiq Abubakar, President of the Council for the Regulation of Engineering in Nigeria, linked the frequent building collapses in the country to the rising cost of cement. Speaking at an investigative hearing by the House of Representatives Joint Committee on Solid Minerals, Industry, Commerce, and Special Duties, Abubakar stated, “The increase in cement prices is a key factor contributing to building collapses. The high costs compromise the quality of materials used in construction, directly impacting building standards.”
The government’s efforts to address the housing deficit through various measures have yet to make significant progress, as the high cost of inputs, particularly cement, continues to hinder affordable housing initiatives.
