Leading cement manufacturer, Dangote Cement Plc., recently
announced drastic reduction of the prices of its cement.
The new price regime announced by the Group Managing
Director/Chief Executive Officer, GMD/CEO, of Dangote Cement, Mr. Devakumar
Edwin, pegged the Dangote 32.5 cement grade at N1,000 per 50 kg bag, while the
higher 42.5 grade would sell for N1,150 per bag.
Reactions have since trailed this announcement, with industry
watchers expressing concerns over the sincerity of this action.
Some observers see this move as politically engineered with comments
such as; “We enjoy
N1,000 for 4 months...and after February 2015 it goes
back to N 2000...lol...campaign strategy...Nigerians don wise pass those
tricks now. Jonathan try again.” and “More like subsidized cements by
GEJ for re-election.” and “All that glitters is not gold.”
Timothy a concerned citizen said "the fact is cement is overpriced
in Nigeria and so someone like Dangote can easily crash the price without it
affecting his business". He further went on to say that "this news seems too good
to be true, I pray it is true".
Essence another concerned citizen said “Dangote too has
joined politics not as business as usual but as political strategy. After d
increment of cement before he know reduced d price because people are not patronizing
his product again. I hope is not using this to enable Goodluck Ebele Jonathan
(GEJ) to campaign for us come January because these are Federal Government
strategy to brief d public about our economy .The ruling People’s Democratic Party
PDP) has lost this one again because we the masses are more elaborate than the
so called politician nothing can shift our stand GEJ and his Executive Council
will be is disappointed in February 14 2015 electoral polls .We refused to be bribed
with rice, kerosene and money but will are moved by infrastructure development.”
Yomi an Engineering Undergraduate in an interview stated
that “If the price can be maintained, then it is good news. If it’s for a short
period, then wholesalers can catch on the opportunity. Either way, it is still
favorable to the people at least in the short run.”
Other close observers see the price reduction as resulting
from the emerging competition in the cement industry, further stating that monopoly
is a sin.
Nosa, said in his opinion, that while he welcomed the
price reduction as a good development, it will neither decrease the current
cost of renting a house nor buying one. If you can't afford to buy a house yet,
it changes nothing. It only favours those that are currently building or the
ones who can already afford it.
In conclusion, I think people need to be patients for some
several months to how real this is. Dangote group has been known to crash
prices of items several times in the past to run her competition out of
business. After the aim is achieved prices are once again upped. I'm not saying that's what's going on now, but
one can never accurately predict based on the past antecedents. But of course,
anyone that has a project to do better buy as many bags of cements as they can
when the price reduction is actualized.
This will also create some problem for sellers who have
large stock of cement for sale. The timing of the initiative has confounded industry watchers, who say that from experience, the cement market is on the verge of entering the accelerated demand phase as the raining season is tapering and the dry season which provides the opportunity for increased construction and building activities is setting in.
Ajibola Aderonke is an auditor at professional services firm Ernst & Young (EY). She previously worked another Big 4 accounting firm PwC. She can be reached at ajibolaaderonke@gmail.com for ideas and suggestions. The post above and its ensuing comments, if any, is purely the opinion of the writer.
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