East Africa: ‘Return import tariff on cement or we close down’

East Africa: ‘Return import tariff on cement or we close down’
Published: 29 November 2009

The East African Cement Producers’ Association wants the 35 per cent tariff for imported cement products restored to save the sector from collapse.

According to EACPA chairman David Njoroge, there should be a $50 per tonne charge to supplement the 35 per cent tariff but the higher of the two should be charged.

“The specific rate has been proposed to counter dumping and subsidies by the exporting countries as well as the under invoicing of cement at the ports of entry,” he said.

The association has appealed to East African Community partner states to avert the imminent closure of the seven cement manufacturing plants in the region, which employ more than 5,000 people. EACPA also wants Uganda’s request to import duty free cement products from Asia be rejected.

Since the establishment of the EAC Customs Union protocol in January 2005, cement was classified as a sensitive product with a duty rate of 55 per cent: 25 per cent common external tariff (CET) and a suspended duty of 30 per cent.

5 per cent reduction

The partner states had also agreed that the CET on cement should be reduced by five per cent each year for the subsequent four years to stabilise at a target rate of 35 per cent by 2009.

EACPA secretary Harpreet Duggal told The EastAfrican that the tariff was designed to safeguard the cement industry in the EAC from the threat of dumping by low cost producers.

The tariff would also shield the local cement prices from subsidies given to importers by their respective governments.

Mr Duggal said that Tanzania has been worst hit by the importation of cement from Pakistan, which has taken over 15 per cent of the domestic market.

“The EACPA is deeply concerned at these developments and is worried about the survival of the cement industry in the EAC if the partner states do not take corrective action,” he said.

The EACPA comprises cement manufacturing companies from Kenya, Uganda, Tanzania, Rwanda and Burundi.

According to East African Business Council executive director Charles Mbogori, the influx of cheap cement imports will in the long run have a negative impact on the local industry.

Mr Mbogori said that the local cement industry is faced with high production costs resulting from high energy costs, labour costs, a poor distribution network, especially railway transport and inadequate ancillary industries for spare parts and consumables.

Although the EAC common external tariff is in three tariff bands — zero per cent for raw materials, 10 per cent for intermediate goods and 25 per cent for finished products — goods considered sensitive, like cement, often attract a higher tariff.