Punch
In the past six months, Nigerians have witnessed an uncontrolled increase in the price of cement, a key material in the construction industry. TEMILOLUWA O’PETERS writes on the impact on building projects
Mid-April 2020, Mr Idowu Adesina, an accountant, started the expansion of his family house to a two-storey building. Trying to take advantage of the lockdown period, he had begun the project with the hopes of completing the building before the lockdown was lifted.
However, the house, which he lives in with his wife and children, stands uncompleted today.
According to Adesina, this is largely due to increasing cement price.
He said, “Cement is like gold now; it’s hard to get. When I started out, I had a budget for the entire project. Now, I have surpassed the budget by far because of the increase in the prices of building materials, especially cement.
“I had to suspend the project because I couldn’t keep up with the price increase. I also have my family to feed and with the increase in the prices of almost everything, I had to prioritise the most important things.
“It’s heartbreaking because I had plans of dedicating the house this April, but look at the situation now.”
Prior to the fourth quarter of 2020, cement was sold for between N2,400 and N2,500 per 50kg bag in many states. But in October, the price of the commodity started rising as a result of insufficient supply and other factors, and has increased by about 45 per cent to N3,500 per 50kg bag.
The price of a bag of cement currently ranges from N3,500 to N3,800, depending on the brand and the location.
In August 2016, the price of a bag of cement was increased from N1,600 to N2,300. Thus, between August 2016 and today, the price has risen by more than 137 per cent.
With cement being one of the main materials in building, the persistent increases in prices pose a threat to many projects and the performance of the construction industry, according to stakeholders.
A developer and the Chief Executive Officer, Bezaleel Construction and Designs, Blessing Aderomu, complained that cement price had been a huge problem for his business as almost everything in the built industry involved cement.
According to him, another major challenge aside the price is the availability of the commodity.
He said the high demand for cement amid very little supply brought about the price hike.
Aderomu stated, “In the space of six months, we experienced a huge price increase, which translates to an increase in the overhead/budget and slows the rate of development when clients have to look for money to add.
“If the client is not willing, that means you have to reduce the quality of the output, which is not desirable, because quality comes first.
“If you don’t construct a standard building, you cannot ensure the occupant’s safety. We need more cement in circulation to force down the price.”
Stakeholders decry price hike, call for cement market liberalisation
The President, Nigerian Institution of Estate Surveyors and Valuers, Emmanuel Wike, said the increase in cement price would affect the number of properties coming into the market in the next few years.
Describing cement as a key construction material, he said its high prices would affect the general cost of construction.
He noted that this would further increase the housing deficit of 22 million units in the country, thus making more people unable to afford houses.
According to him, the price hike will also cause some developments to become abandoned projects.
He enjoined the government to encourage people who had the resources to decentralise the market in a bid to put an end to a situation “where just a few organisations are suppliers/manufacturers of cement.”
“Those who have the resources to go into this kind of investment should be allowed so that at the end of the day, there’ll be competition. The Federal Government should create policies that will encourage this investment,” Wike said.
The President, Nigerian Institute of Building, Kunle Awobodu, also called for the liberalisation of the cement market.
He lamented that the recent price hike was creating crises in the built industry, with the attendant increase in the costs of construction.
According to Awobodu, the hike is creating friction between clients and construction firms due to cost variations and giving rise to abandonment of projects as well as discouraging people from embarking on new projects.
He also warned of the imminent danger of substandard construction, saying the low purchasing power of Nigerians could lead to compromised quality.
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