Presidential decree liberalises cement sector in Congo

Presidential decree liberalises cement sector in Congo
Published: 21 February 2007

A decree signed Saturday (17 February) by Congolese president Denis Sassou Nguesso has liberalised the price and import of cement. This effectively puts an end to the cement monopoly formerly held by Chinese-owned Société des Ciments du Congo (SCC). Recurring shortages of cement were at the root of this initiative. Indeed, SCC’s productive capacity stands at 100,000tpa, an estimated 200,000t short of the country’s yearly domestic needs. Now that economic actors will no longer be required to purchase a special licence from the government to import or produce cement, the pricing mechanism will be subject to market forces. Previously, state-mandated prices had valued a 50-kilo sack of Congolese cement at 5,900 CFA francs (US$11.36), with the cost of imported cement set slightly higher by the Ministry of Commerce at 6,100 CFA francs. 
 
Despite the liberalisation of the cement sector, Sassou Nguesso’s decree allows the Ministry of Commerce to retain the right to control pricing if need be.Significance: The remnants of Congo’s Marxist political heritage are slowly disappearing as the country’s economy becomes increasingly market-oriented. While the government has been inclined to determine the prices of a number of essential products to rein in prices and avert mass protests, a number of subsidies constrain the growth of the domestic economy. Cement was one such product whose subsidisation has become an impediment to the productive growth of the economy. An important informal market has emerged, with supply shortfalls driving inflationary pressures. The influx of cement from neighbouring producer countries should drive down prices and ease input costs in the thriving construction sector.