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Exploring Factors Behind the Surge in Cement Prices in Nigeria

Describing the recent scenario in Nigeria's building materials market as dire would be an understatement. The abrupt surge in prices, particularly that of cement, has sent shockwaves across the construction sector, posing significant challenges and jeopardizing livelihoods.
 
In a span of merely two months, the price of cement skyrocketed by almost 200 percent, soaring from around N5,000 to N5,500 in January to a staggering N12,000 to N15,000 in February 2024. This dramatic escalation has raised concerns among Nigerians, casting doubts on the feasibility of affordable housing initiatives.
 
Of particular concern is the fact that cement, unlike some other commodities, is locally produced utilizing limestone, a readily available raw material. This local sourcing should theoretically insulate cement prices from the volatility of foreign exchange markets. However, experts argue that the current price surge reflects broader market realities and operational challenges faced by manufacturers.
 
Speaking at the BusinessDay Property Investment (PRINVEST) conference in Lagos, industry experts shed light on the underlying factors contributing to the exorbitant prices. Emeka Eleh, Principal Partner at Ubosi Eleh + Co, highlighted the impact of rising logistics costs and diesel prices on manufacturers' operational expenses. He noted significant increases in fuel costs following the removal of petrol subsidies, coupled with infrastructural challenges such as poor road conditions.
Obinna Onunkwo, Founding Managing Partner and Deputy CEO at Purple, echoed these sentiments, emphasizing the need for government intervention to address systemic challenges such as inflation and volatile exchange rates. However, he cautioned against price controls, advocating instead for targeted solutions to alleviate manufacturers' burdens.
In response to public outcry, the federal government convened a meeting with major cement producers, resulting in an agreement to cap the price of a 50kg bag of cement between N7,000 and N8,000, depending on location. President Bola Tinubu further urged cement producers to reduce prices, citing affordability concerns.
 
Cement price: Looking beyond limestone as local raw material
Minister for Housing and Urban Development, Ahmed Dangiwa, underscored the ramifications of escalating building material prices on housing affordability, threatening to permit massive cement imports if manufacturers fail to comply with price regulations. This move reflects the government's commitment to addressing the housing crisis exacerbated by surging construction material costs.
 
The surge in cement prices has not been an isolated phenomenon; iron rod prices have also witnessed significant hikes, further compounding challenges within the construction sector. These developments underscore the urgent need for collaborative efforts between government and industry stakeholders to stabilize prices and ensure access to affordable housing materials for all Nigerians.
 

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