New cement policy for Nigeria

New cement policy for Nigeria
Published: 30 January 2008

According to an informed editorial report from Nigeria’s This Day, it had always seemed obvious that something was wrong with the previous Nigerian administration’s blanket ban on cement importation into Nigeria. Although the apparent justification for the policy was to encourage local production and protect indigenous investments in the sector, the situation in the market now has made all of that argument unsustainable, if not unjustifiable.

While domestic demand for cement is put at 18Mta, local manufacturers can still only supply about 6.5Mta. The overwhelming deficit needs to come from somewhere. But the lid placed on the importation of bulk cement made the price of the product to sky-rocket beyond the reach of most Nigerians.

Economic policies are certainly not meant to inflict pain on the people. Rather, their aim should be to alleviate pains and improve the people’s standard of living. In the sweeping ban on cement importation, none of these was the case. Instead what happened was the emergence of cement importation monopolistic oligarchies who fixed their prices rather arbitrarily, to the detriment of consumers – says This Day.

It was no wonder that no sooner had the Yar’Adua administration been sworn in than petitions started flooding in on the need to lift the ban on the importation of cement, at least until such a time when local manufacturers can meet local demands. Last week, the federal government wisely heeded that call by lifting the ban on the importation of bulk cement.

Local reporters think that this is a well advised action that is bound to reduce the high price of cement across the country. Those who view the new measure as an unnecessary policy somersault get it wrong. A good government must weigh the impact of any policy periodically and adjust it as may be necessary from time to time. This is not tantamount to policy somersault. Rather it should be seen as a timely intervention to save the nation from economic paralysis that could arise from ill-considered policy measures.

True, local investors in the cement production need to be encouraged. However, such incentives need not necessarily be in the form of granting them market monopoly, especially when such monopolies seem not to translate into tangible benefits to consumers.  However, says This Day, it is important that the lifting of the ban on importation does not extend to bagged cement. Importers of bulk cement must continue to add local value which creates jobs, by bagging their product locally.