CEMENT PRICE WAR: WILL THE PROPAGANDA, PANIC MEASURES AGAINST THE BUA INITIATIVE WORK?
Events in the cement sector in the last couple of weeks have been really worrisome.
Ever since BUA Group Chairman, Abdul Samad Rabiu disclosed that his products would be sold at 3,500 per bag, the other players in the industry have been jittery.
First, the media was and is still agog with rhetorics over whether the price reduction was possible and feasible. Obviously, most of these did not come from outsiders in the industry but sponsored by industry leaders who feel threatened. Because these have not worked, stories of BUA Cement unavailability started circulating, also from the same sources.
Meanwhile, investigations revealed that BUA Distributors in EDO, Sokoto and some other parts have been picking their supplies at 3,500 per bag. Indeed one of them,
Mike Igwe, a distributor who spoke with us confirmed that ever since the price was reduced, he has been buying at that price and that those who claim that BUA is yet to effect the price change don’t know what they are saying.
According to him, ‘the other manufacturers have reasons to be afraid. They are definitely going to lose out in the market’. Who will abandon where he’s buying for 3,500 NAIRA per bag and go to Dangote where he will pay over 5,500 Naira? he further asked.
Speaking further the Benin-based cement dealer suggested that road transportation, especially the bad roads occasioned by the rains could have been the reason why other parts of the country did not immediately enjoy what he and many other distributors around had been enjoying. However with the rains already going, other parts of the country, must have started receiving their supplies at the new price. He also figured that BUA must have jerked up production to meet the increased demand as more buyers are switching over.
Other distributors we spoke with revealed that Dangote specifically has come under intense pressure since the price reduction by BUA and has been looking for ways to ensure that he does not lose customers. They confirmed that Dangote has been giving out one free truck for every seven trucks bought by distributors, all in a bid to ensure that he saves his face. But, according to builders we spoke with, this form of tokenism will not trickle to retailers and there is no way the consumers can feel it either. This is because if you give one truck to a distributor who bought seven trucks, he will prefer to sell rather than give away the cement.
There is no doubt that Dangote and Lafarge’s reaction to BUA’s decision to cut the price of cement really betrayed their position vis a vis the current situation in the country. Nigerians need succor from all fronts. They need business leaders who can rise above money making interests and feel for the people.
Both organizations have been jittery and have resorted to arm twisting BUA rather than taking concrete steps to try and maintain their share of the market.
It is also worthy of note that sponsored analysts are springing up to make wild claims that the price cut is neither practicable nor sustainable. This, industry players know is coming from those who feel threatened by the BUA move.
For Dangote, many distributors saw this opportunity as a major step towards moving away from the company’s high handed practices. Those who spoke with us pointed to the fact that they cannot pay cash to him but only credit. According to them, Dangote will always hold on to their cash whenever price changes. He will hardly make refund if there’s increase in price unless you pay the extra money added on top.
This is unlike the practice with BUA where they supply you the goods with the old price even if there’s price increase. And given the volatility of the market presently, with BUA Cement promising to reduce the price further when they hit the 17million Tons per annum target, no one will like to be caught off guard.
Nigerians need to mount pressure on the other major cement manufacturers to join BUA in reducing the price of cement. The pressure created by the BUA move could be seen in the number of times Dangote has come out to deny any form of price increase. Meanwhile, rather than decreasing the price so that the masses can benefit, he has decided to gift distributors one truck each if and when they buy seven trucks. His intransigence and unwillingness will further make the market volatile, unpredictable and consumers may continue with this till first quarter of 2024 when BUA hits the 17million tons per Annum target and force all of them to drop prices to the 3,000 NAIRA per bag which Abdul Samad Rabiu promised Nigerians.
The dilemma the other manufacturers face now is that prices are already coming down and this trend will continue as BUA cement gets supplied at the new price all over the country.
It’s only a matter of time.