All is not well with the construction industry as local demand for cement appear to nosedive due to certain policies of the government. In this report by BLESSING ANARO, he writes on what the closure of the Dangote Cement plant in Gboko and other likely plants across the country means to the economy of Benue state and the country in general.
On a normal day, when Dangote Cement Factory in Gboko is fully in opertation, the impact is seen and felt even outside the company’s gate. This is because of the volume of activities taking place even outside the factory. This ranges from food sellers to mechanics and other artisans whose services are needed by the staff and visitors to the factory.
Here, almost every bank in Nigeria has a branch close to the factory. It is, in fact, a flurry of banking activities as transaction goes on daily by customers of these banks.
When however LEADERSHIP alongside other groups of selected journalists visited the factory recently, it was a different story altogether as activities that characterised the immediate environmrnt of the factory were non existent. The banks were bereft of customers as usual thereby prompting a bystander to say that if the factory remained closed for a long time, some of the bank managers would lose their jobs.That is the crux of the matter.
The multiplier effects of this lull in activities on the economy of small scale business people as well as big time businesses can spell a doom for the economic growth of the country especially when considered from the effects of such closure of other Dangote factories scattered across the length and breath of the country.
This sad development prompts one to ask the question of what actually went wrong. According to Joseph Makoju, the Chairman of the Cement Manufacturers Association of Nigeria, cement manufacturers are producing more cements than are consumed in the country, and hopes government might patronise local cement manufacturers to save the fledgling industry from the path the textile industry went.
The argument from many quarters is that the government should construct roads that would last longer with ‘Made in Nigeria’ cement products
To this end, Lafarge Cement WAPCO Plc recently called on the Federal Government and other arms of the government to explore more ways of using more local cement especially in the construction of roads in the country.
The Managing Director of the company, Mr. Joe Hudson, last year said that with the Nigerian economy and society at a crucial stage of development, local cement manufacturers should be encouraged to be capable of producing far more than the country consumes. According to him, the time has come for other valuable applications to be generated for the product.
“The federal government must be commended for successfully implementing the cement backward integration policy, which has seen cement output in Nigeria soar to unprecedented levels, making the country fully independent in cement production and supply. Following this great achievement, the next step is for all stakeholders to begin to create more value by seeking other applications for the essential commodity,” he said.
Even cement companies outside Nigeria which have experimented on the project, said, if roads were repaired and built using a soil cement stabilisation process, then repairs and construction would cost less and the roads would be more durable.
This is according to AvaleenMooloo, civil engineer with the Trinidad Cement Ltd (TCL) Group.TCL had launched what was termed a, “trial strip using soil cement stabilisation technology”.
The launch took place at TCL’s quarry in Mayo, where government functionaries in Trinidad visited to ascertain the claims, as one of the roads leading to the quarry was repaired using the technology.
The 50 metres road was stabilised using cement and aggregate from the quarry in its base and sub-based layers.
The road was formulated to endure weight of at least 60 tonnes, Mooloo said.
She said there was a need for more sustainable roads. Some of the benefits of the technology, Mooloo said, included that it enhanced load distribution, eliminates rotting of base, reduces moisture problems and reduces deflation.
Mooloo said TCL’s aim was to reveal other uses of cement, develop new markets in the construction industry and develop a new product — 30 per cent pozzolam blended cement.
“Our project is ideal for agricultural roads. Our road is really designed for heavy-capacity vehicles, so, it could be used for agricultural roads as well as areas where soil type is very poor. This is ideal for building the foundation aspects of the road.
When you are treating with your sub-grade and your base level, we are saying that it is ideal for road application and you could put the surface layer of your asphalt or whatever. For any type of road it is applicable.”
Mooloo said strength tests on the trial strip were in progress and the results would be available by year’s end.
Outside Trinidad, cement manufacturers in Nigeria are pleading with the Federal Government to yield to calls by cement manufacturers to come to their aid as the cement manufacturing industry may soon follow the way of the textile industry that once employed hundreds of thousands of people, but have become moribund.
Joseph Makoju, regrets that the development is happening too early in the investment circle when the investors are yet to recoup significant part of their investments, and as such could cripple the industry.
“It has damaging multiplier effects on the economy in terms of job loss and decline in all other economic activities that are dependent on the cement industry”, he explained.
Majoku who also doubles as Special Adviser to AlhajiAlikoDangote, President/Chief Executive of Dangote Group wants the Federal Government to restrain cement importation by imposing reasonable tariffs so as to encourage investors who have in the past few years invested heavily in the manufacturing of products that were mainly imported in the past.
He also said, government should work harder towards ensuring good roads so that haulage cost could be reduced, thus bringing down the overall cost of cements. He said the move will enable more people access cement for their building purposes. Haulage, he said, accounts for between 20 and 25 percent of the open market price of cement.
Makoju who spoke with select journalists during a tour of Dangote’s Gboko plant that is a ghost of itself and the Obajana factory, which is functioning also decried the high price of diesel.
“Energy cost accounts for over 35 percent of production cost in Nigeria compared to less than 10 percent in China. In Nigeria, the price of LPFO has jumped from N25/litre to N107.76/litre as of November 2012”, he said.
More importantly, the chairman of cement manufacturers wants the government to commence the use of cement in road construction to enable the industries produce to installed full capacity.
He recalled that the cement industry came from a comatose status as at 2002 when local production was just at 1.9 million tons.
But following the backward integration policy of government, the total production rose to 18.5 million tons as at 2012, with another 12 million tons expected from the expansion and new plants currently under construction across the nation by manufacturers, said Majoku.The 18.5 million tons, according to him represents only 65 percent of the present total installed capacity of the industry.
On why the government will need to intervene, he revealed that between 2002 and May 2012, a total of $6 billion investment was made by the local manufacturers, while the on-going expansion and new plants is estimated to cost another $3.5 billion.
The chairman stressed that, as a result of the continuous rapid growth, the nation no longer requires cement imports as local demand are being effectively met and even surpassed.
“However with continuous importation of the product into the country as at today, most local cement plants have huge inventory of unsold cement signifying the attainment of self-sufficiency”, said Makoju.
He said Dangote alone has inventory of 950,000 tons of cement and clinkers like other manufacturers, which could be easily verified.
The importation of cement to the detriment of the economy, according to him, has become very attractive because it comes with a paltry duty of 20 percent and levy of 15 percent and clinker at 10 percent, thus making the landing cost of imported cement to be very cheap at $35, that is just over N5,000 per ton (FOB).
Also, he explained that most cement manufacturers from other countries reduce their prices to be able to sell to other countries.
“Of course, the glut in the cement industry has assumed global dimension, this is why China from where most of our products come from, export at highly subsidized cost to keep their factories running”, he said.
The cement manufacturers have also complained that the federal government is making it easier and more lucrative for cement importers to bring in cement to the country because they are cheaper.
It has been reported that the people and the government of Benue State have already protested the closure of the Gboko plant of Dangote Cement, which was temporary shut down as a result of cement glut occasioned by massive importation of the product into the area.
The Chairman, Gboko Local Government of Benue State, Mr Nahan Zinda, according to a statement, decried the closure of the Plant, saying his local government has lost about N15 million in weeks.
He said: “Since the company was closed, cement price has gone up. Our people have been jobless and suffering. It may also lead to anti-social behaviours. Our women who are doing petty businesses outside the gate are also complaining bitterly.”
He called on the Federal Government to expedite action by doing all it takes for the factory to be reopened.
The Chairman of the Quarry Community, Mr. Donald Tser, also registered his displeasure over the closure of the factory as it has halted all commercial activities in Gboko Local Government.
He said: “We are afraid that our children may resort to anti-social behaviour and this is dangerous for Nigeria. We are calling on the government to hasten the process of re-opening the plant.”
Mrs Grace John, who spoke on behalf of women traders in Gboko, said social and commercial activities have virtually come to a halt and life is becoming difficult. She appealed for the quick reopening of the plant in the interest of women traders.
These complaints are outside the pinch the banks are feeling, because their huge investments in opening those branches there is tied, and may lead to sack of bank workers.