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Yusuf warns comment on cement manufacturers may lead to revolt

The CEO, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf has expressed concern over the comment by lawmakers over the high cost of cement.

In a statement, Yusuf expressed his displeasure, over the recent remarks on the floor of the House of Representatives by some members that portrayed cement manufacturers in very bad light.

He said the Green Chambers alleged cement manufacturers were exploitative as they engaged in arbitrary fixing of cement price.

He said most of the remarks at the session were capable of inciting the public against the cement manufacturers and putting their huge investments at risk, as according to him it is a dangerous thing to do given the huge stake they have in the Nigerian economy and their enormous contributions to the economy.

The CPPE boss pleaded with the leadership of the House to ensure moderation in the use of language to avoid adverse consequences for investors in the economy, going forward.

He said the scratchy remark is more troubling as the members have not listened to the manufacturers before rushing to judgment and castigating them.

He said: “Cement manufacturers were disparaged, denigrated and portrayed as deliberately inflicting pains on the Nigerians by arbitrarily increasing the price of cement. This is most unfair in our humble opinion. Such weighty allegations should be premised on painstaking study, empirical facts and evidence. The dimensions of the pricing dynamics need to be properly understood.

“For an economy seeking to industrialize, attract investors and create jobs, such commentaries represent negative signaling. Principles of fairness demands that the cement manufacturers should be given an opportunity to tell their own story before members could come to a fair conclusion and judgement. But regrettably, they have been judged publicly, before giving them the opportunity to present their own side of the story.”

He said the said criticism is worse and more painful because the major players in the sector are indigenous companies making giant strides amidst a very difficult operating environment including the multitudes of macroeconomic and structural headwinds.

According to him, they have created hundreds of thousands of jobs both directly and indirectly, and paid billions of naira in taxes with numerous corporate social responsibility initiatives to which they have committed billions of naira.

Yusuf noted that manufacturing is perhaps the most challenging enterprise in the contemporary Nigerian economy as many foreign firms in that space have either exited the country or downsized their operations.

He explained that Cement production is highly energy intensive with gas being the major energy source and is priced in dollars for manufacturers in the country who unfortunately sell their products in naira. This is a major predicament for domestic manufacturers and the implication of that for production cost is better imagined, especially in the light of the plunge in the value of the naira he stated.

According to the CPPE boss the logistics cost of cement distribution is humongous, given the escalating cost of diesel and the state of the roads. Exchange rate depreciation is taking a huge toll on the cost of imported components of production inputs, including spare parts and machinery. The cost of funds is mounting as the CBN continues its aggressive monetary policy tightening.

The latest headline inflation for February was 31.7 per cent all these are variables which are not within the control of the manufacturers and which have profound impact on production and operating cost.

It is important to stress that matters of this nature require painstaking and thorough investigation to determine the pricing dynamics and the ramifications of the factors driving prices. This is critical to avoid hasty and emotional conclusions.

Admittedly, the risk of profiteering increases with monopoly powers in any economy and in any sector. This risk exists in the Nigeria cement industry as there are few dominant players. But this is a regulatory issue that could be addressed within the framework of the Federal Protection and Competition Act of 2018.

The Federal Competition and Consumer Protection Commission (FCCPC) has a responsibility to ensure compliance with the Act to ensure the protection of the interests of the consumers and the public. If there are proven lapses in this respect, the FCCPC should be held to account.

He appealed to the national assembly to always extend due courtesies to investors in the economy in the course of their legislative duties.