Senate calls for tax incentives, industrial protection for cement producers in the country

The Senate on Tuesday called on the Federal Government to provide tax incentives and protections such as offering concessionary loans and larger tax incentives for new entrants into the cement industry to enable it boost production, and as well reduce the price of cement in the country.

These were in response to a motion supported by Senator Ashiru Oyelola (Osun East) and co-sponsored by Senators Bima Enagi (Niger South), Oriolowo, Adelere (Osun West), Sen. Egwu, Samuel (Ebonyi North), Sen. Gaya, Kabiru (Kano South), and Sen. Nnachi, Michael, titled “Need for Liberalization of Cement Policy in Nigeria” (Ebonyi South).

In the motion, Cement is considered as of strategic importance to the development of infrastructures such as roads, bridges, drainages as well as in the construction of residential and public buildings.

“Cement is one of the few building materials in which Nigeria is self-sufficient,” the Senate said. Cement producers’ installed capacity was about 47.8 million metric tons in 2018, far exceeding the projected 2018 demand of 20.7 million metric tons. Nonetheless, cement prices in Nigeria (N380) are roughly 240 percent higher than the global average.

“Cognizant that Cement takes a large share of domestic expenditure, and the price of such commodity significantly impacts the government’s ability to provide much-needed infrastructural works required for the growth of our economy;

“Further cognizant that the recent increase in price of Cement (from N2,600 – N3,800) slowed down the amount of construction work being embarked upon thus negatively affecting labour engagement and almost collapsed the procurement plan of the governments in 2020 Appropriation Act;

“Mindful that the Nigerian cement market is oligopolistic in nature with three players (Dangote Cement (60.6%); Lafarge Africa Plc (21.8%) and BUA Group (17.6%) largely dominating the scene, therefore, making it susceptible to price-fixing practices;

“Convinced that if the status quo persists, the negative consequences of high prices on the economy will outweigh the benefits of producing cement locally;

“Worried that the significant rise in cement prices in the country and the low purchasing power of Nigerians may result in substandard building constructions and non-completion of planned infrastructural works;

“Strongly believes that there is an urgent need to encourage more local production of cement to satisfy the demands of Nigeria with a steady growth rate of approximately 3% per annum; a housing deficit of 30 million units and less engagement of over 10.5 million workforce of the building and construction industry”

According to the Senate, unfavourable government policies, such as multiple taxes, irregular power supply, a government ban on importation in violation of the ECOWAS Trade Liberalization Scheme (ETLS), and subsequent lifting of importation in favour of a few producers, have negative consequences for infrastructure development.

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