BUA Blames Intermediaries for High Cement Prices

Abdul Samad Rabiu, Chairman of BUA Cement, has attributed the soaring prices of cement in Nigeria to the actions of intermediaries in the supply chain. Speaking at the company’s eighth annual meeting in Abuja, Rabiu highlighted that these middlemen have been selling cement at prices far above the intended cost, despite BUA’s efforts to keep prices affordable.

Rabiu explained that BUA Cement sold over 1 million tons of cement to consumers at the price of N3,500 per bag in 2023, with the goal of making cement more accessible and affordable. However, instead of passing on these savings to end users, intermediaries have been selling the cement at prices ranging from N7,000 to N8,000 per bag, effectively doubling the cost to consumers.

The situation has exacerbated Nigeria’s housing crisis, where the high cost of construction materials like cement is a significant barrier to affordable housing. The International Commission on Human Rights reported that over 28 million Nigerians lack access to adequate and affordable housing, and the rising cost of building materials has only made this problem worse. By May 2023, the price of cement had increased to between N7,500 and N8,000 per bag, marking a 74.42% to 86.05% increase, which has raised concerns among experts about the impact on housing affordability.

Rabiu acknowledged that BUA Cement could not sustain its low-price policy due to external economic pressures such as the devaluation of the naira and the removal of fuel subsidies. He pointed out that while the company had hoped to keep prices low, the actions of intermediaries made it impossible to continue the policy. “We sell cement at N3,500 and hope that consumers and traders will pass on the benefits of low prices to end users, but some cement is sold at N7,000 and N8,000 per bag. We sold over a million tons at N3,500 before we realized what the buyers were doing,” Rabiu stated.

The high cost of building materials has significantly increased construction costs, leading to higher rents and housing prices, which further strains the already challenging housing market in Nigeria. Experts like Adekunle Ebenezer, a senior surveyor at Ankole University, Lagos, noted that building materials account for 50-65% of construction costs, and as these costs rise, so too do the costs passed on to consumers. Ebenezer also expressed concern over the rise of non-eco-friendly buildings in Nigeria, attributing this trend to the high cost and lack of availability of sustainable building materials.

Furthermore, Sadiq Abubakar, Chairman of the Nigerian Technical Regulatory Commission, linked the increase in cement prices to the rising number of building collapses in the country. During an investigative hearing in May, he pointed out that the high cost of cement is one of the main factors contributing to substandard construction, which in turn leads to structural failures.

Overall, the situation underscores the complex interplay between economic factors, supply chain dynamics, and the housing crisis in Nigeria, with Rabiu’s comments highlighting the need for better regulation and oversight in the cement supply chain to ensure affordability and safety in the construction industry.