Building with tears as cement prices, others escalate

Building with tears as cement prices, others escalate
11 September 2006

Nigeria as the nation’s landscape is now dotted with a plethora of uncompleted or abandoned commercial and residential housing projects. The road to building construction and individual home ownership in the country has indeed become very cumbersome.

Built environment experts who are beginning to develop goose dimples over the issue point to a  number of factors as being responsible for this ugly development. They include: the high  cost of land, no thanks to the Land Use Decree of 1978 which was made a part of the 1979 and 1999 constitution, thus making its amendment rather cumbrous; the  near absence of mortgage facilities, the high cost of labour and recently the outrageous prices of essential building materials.

The biting inflation in the country is not helping matters as the cost of delivering projects have taken an upward leap, far beyond the budgetary projections of the  developers. Many have been forced either to modify the design of their houses, lower standards or outrightly abandon the construction of such houses.

The prevailing situation is bound to compound the woes of cash strapped homeless Nigerians whose dreams of owning decent shelter is fast becoming a mirage.  Against this backdrop, some housing experts are beginning to make a case for the utilization of local building materials in building low income houses. But the snag is  that they are also not readily accessible and affordable.

The popular adage that one man’s meat is another man’s poison is playing out in the building materials sector. Whereas developers are crying about the escalating  cost of basic building materials, manufacturers, wholesalers and retailers of such building materials are smiling to their banks with fat gains from their daily sales.  Investigations revealed that although prices of these materials have hit the roof tops, many institutional developers are still going ahead with their projects, hence the  boom being enjoyed by dealers.

A Lagos market survey shows that a 50 kg of bagged cement which sold for N1,000 early in the year now sells for N1,300, an increase of about 30 percent.  Similarly, a tonne of cement containing 20 bags which was sold for about N21,000 now sells for N26,000. The cost is even higher in places outside Lagos. In  Owerri, for example, a 50kg bag of cement sells for N1,500 while in the hinterland, the price rises to N1,700 per 50kg bag due to handling and transportation  charges. In the coastal areas, the price of the product is said to have escalated to N2,000 per bag.

Cement related products like vibrated blocks have also taken to the roof tops. The 6x9x18 block now sells for N75 a unit as against the N70 it was sold earlier in the  year. In the same vein, the 9x9x18 block is now selling for N95 instead of the previous N90.

The prices of the different brands of rod reinforcements have also gone up. For instance, a tonne of 1/4 (33 pieces) of high tensile rod which was sold for N88,000 in  June is now selling for over N90,000. A tonne of the 1 /2 (93 pieces) is currently being sold for N90,000 as against the N78,000 the same quantity was sold two  months ago. The price per tonne of the 3/4 (33 pieces) rod has also gone up from the June price of N80,000 to N82,000.
Other building materials whose prices have also risen include wood and wood finishes, sanitary and electrical fittings as well as roofing and materials and earth work.

Construction cost experts who spoke to Vanguard Features (VF) on the soaring price of essential building materials blamed it on the increasing tempo of  construction activities, the rising cost of energy, inconsistent government policies and the epileptic state of local industries engaged in the manufacturing of building  materials.

Chairman of the Lagos State chapter of the Nigerian Institute of Quantity Surveyors, (NIQS), Mr. Femi Onashile, attributed the increase in the cost of cement to the  turnover in the construction industry. Although we are in the rainy season when construction activities ought to be at the lowest ebb, Mr. Onashile explained that the increased in construction activities  arose due to the increasing liquidity in the banking sector as a result of the recent consolidation exercise.

“The increase in construction activities is putting a lot of pressure on the limited supply. We don’t produce  enough  cement to take care of the local consumption. The  ban on the importation of bagged cement has also helped to aggravate the already bad situation”.

On iron rods, speculations are that the impending acquisition of Ukrainian Steel  by a United Kingdom based conglomerate will create a near monopoly in the  industry. The locally manufactured iron rods are said to be of lower strength, hence builders shun them.  

Sharing the views of Mr Onashile, the Dean, Faculty of Environmental Sciences at the Akanu Ibiam Federal Polytechnic Unwana Afikpo in Abia State, Mr Sam  Onwusonye identified four factors responsible for the soaring prices of materials.

According to him: “ We have failed to look inwards to develop companies that would have helped in mass producing building materials. We have continued to  depend on the importation of these products and so long as that is the case, prices will continue to go up”.

Mr Onwusonye who is also the NIQS Research and Development Secretary further blamed the ugly trend on what he called “government’s policy somersault”. He  regretted that instead of giving a level playing ground to interested businessmen to bring in cement and other essential building materials,  government has succeeded in  a creating a near monopoly where only a few favoured companies are given licences to import these products. The result is that big time dealers like Eagle Cement,  Ibeto Cement and Rock Cement have fizzled out, leaving only a few brands in the market.

Mr Onwusonye lamented that Nigeria’s rich potentials are not being harnessed to revive the ailing cement companies at Nkalagu and Okpilla in Ebonyi and Edo States respectively. “The so-called privatization of these companies is not helping matters. Instead of handing them over to core investors who will bring in money to  revive them, the government appears to be only interested in encouraging importation of the commodity,” he said.

Noting that cement constitutes about 40 per cent of materials needed in a building, the don regretted that it is totally unaffordable to the majority of Nigerians who  desire to have a roof over their heads. On reinforcements, the construction cost economist decried the lack of continuity in government policies and programmes. He  observed that it is inconsistency in policies that has led to the non-take-off of the steel rolling mill at Ajaokuta because new technology has overtaken the old one.

Another factor identified by Onwusonye is the low value of the  Naira vis avis other foreign currencies. “You are required to buy at the currency of the seller,” he said.
As a panacea to the soaring cost of these basic materials, Mr Onwusonye suggested the development of local alternatives. “We are blessed with all the necessary ingredients for the product of cement."

He also blamed the government for not doing enough to stem the escalating cost of cement and related building materials. He noted that the high cost of these materials will further compound the woes of the masses as they will be saddled with paying more for their accommodation while  those engaged in building their own houses may be forced to abandon them. As a panacea to the problem, Mr. Dada called for the reintroduction of Price Control Boards who will routinely monitor price trends to check arbitrary increase. 

Published under Cement News