East Africa: EAC Lowers Cement Tax

East Africa: EAC Lowers Cement Tax
Published: 25 August 2009

The East African Community Council of Ministers has resolved to reduce the common external tariff (CET) on cement from 35 to 25 per cent.

Mr Andrew Luzze, the Uganda Manufacturers Association (UMA) Policy Officer explained the resolution is aimed at increasing cement imports into the region to mitigate the current high cement prices.

"High prices have caused the sector to decline in both constructing new buildings and reduction in the sector’s contribution to the Gross Domestic Product (GDP) which has fallen from 18 per cent downwards in Uganda for example and possibly in the whole region," he said.

"Since governments cannot allow the contribution to decline further, they have reduced the tariff from 35 to 25 per cent. This will boost cement supply and result into reduction in prices," he said.

Luzze said a report released by the East African Cement Producer’s Association in June indicates that there will be growing demand for cement in the region for the next seven years.

The report says Kenya’s consumption is projected to grow from 2.4Mt in 2009 to 2.6Mt in 2010, 2.8Mt in 2011, 3Mt in 2012, 3.3Mt in 2013, 3.5Mt in 2014 and 3.8Mt in 2015.

Tanzania will consume 1.8Mt in 2009, 2Mt in 2010, 2.1Mt in 2011, 2.3Mt in 2012, 2.5Mt in 2013, 2.7Mt in 2014 and 2.9Mt in 2015.

Uganda is projected to consume 1.3Mt in 2009, 1.4Mt in 2010, 1.5Mt in 2011, 1.6Mt in 2012, 1.7Mt in 2013, 1.8Mt in 2014 and 2Mt in 2015.

Rwanda is expected to consume 266,000t in 2009, 29,3000t in 2010, 322,000t in 2011, 354,000t in 2012, 390,000t in 2013, 430,000t in 2014 and 473,000t in 2015.

Burundi is projected to consume 121,000t in 2009, 133,000t in 2010, 146,000t in 2011, 161,000t in 2012, 177,000t in 2013, 195,000t in 2014 and 215,000t in 2015.

Kenya has four cement producers, namely, Bamburi Cement Company Limited, East African Portland Cement Company Limited, Athi River Mining Limited and Mombasa Cement.

Tanzania has Tanzania Portland Cement Company Limited, Tanga Cement Company Limited and Mbeya Cement Company Limited.

Uganda has Hima Cement Limited, Tororo Cement Company Limited while Rwanda has got Cimerwa Limited.