Senate demands tax incentives, protection for cement producers

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The Senate has called on the Federal Government to provide more industrial incentives and industrial protections such as offering concessionary loans and larger tax incentives for new entrants into the cement industry in order to boost production, reduce price and encourage more valuable producers in the country.

However, the Senate decline to advise the Federal Government to liberalize her current policies on cement production, particularly license restriction, to attract more investors in order to make cement more available to Nigerians at a moderate price;

Likewise, the upper chamber did not accede to the urge on the Federal Government to set up a Committee to investigate anti-competitive practices by local cement producers; direct the cement industries in Nigeria to increase their production, and reduce the price of 50 Kg of cement to a barest minimum considering the fact that the materials for its production are mainly sourced locally.

These were consequent upon a motion titled ‘Need for liberalization of cement policy in Nigeria’ sponsored by Senator Ashiru Oyelola (Osun East) and co-sponsored by Sen. Bima Enagi (Niger South), Sen. Oriolowo, Adelere (Osun West) , Sen. Egwu, Samuel (Ebonyi North), Sen. Gaya, Kabiru (Kano South), and Sen. Nnachi, Michael (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.

The Senate noted that “Cement is one of the few building materials in which Nigeria is self-sufficient. As of 2018, the installed capacity of cement producers was about 47.8MMT which is far above the estimated (2018) consumption of about 20.7MMT. Yet, the prices of cement in Nigeria (N380) is about 240% higher than the global average;

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“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”

The Senate believed that unfavorable government policies such as the imposition of multiple taxes, erratic power supply, a government ban on importation in violation of ECOWAS Trade liberalization Scheme (ETLS), and subsequent lifting of importation in favour of few producers have negative implications on the growth of infrastructures.

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