Price War Over Increasing Demand For Cement Products: A Case Study Of Africa Market Pricing

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The recent revelation over desperate in the selling price of cement companies in Nigeria and other parts of Africa county have shown a wide gap of unbalance in the cost unit price of its product.

A practical illustration of the sort is the Dangote Cement Group sells its product in Southern African country, Zambia, for at most 110 Kwacha which equals to about N1,800 in Nigeria, while the same product sells for not less than N3,500.

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The Zambia Board of Commissioners of the Competition and Consumer Protection Commission said it ordered Lafarge Zambia Plc, Dangote Cement Zambia Limited and Mpande Limestone Limited to revert to the cement prices ranging between Kwacha 99 to Kwacha 110 after there was an uproar over its recent increment.

The Board also fined Lafarge Zambia Plc and Mpande Limestone Limited 10% of their annual turnovers for the year 2019 and another 10% of their 2020 annual turnovers for price-fixing and division of markets.

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The Board, however, said it was lenient with Dangote Cement Zambia Limited, for having cooperated with the Commission during investigations.

According to Zambia News, the decision to fine Lafarge Zambia Plc and Mpande Limestone Limited was made during the 49th Board of Commissioners Meeting for the Adjudication of Cases held in Lusaka on March 30, 2021.

This was after an exhaustive investigation by the Commission initiated in January 2020 following the Commission’s observation of a sustained increment of cement prices from an average of K55 to K100 per 50kg bag between July 2019 and January 2020.

The continuous price increment of cement by the parties led the Commission to suspect that there were possible collusion and an agreement to fix the prices of cement and the Commission carried out investigations for a year.

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In a statement issued by CCPC Senior Public Relations Officer, Namukolo Kasumpa, the Board has also ordered Lafarge Zambia Plc, Dangote Cement Zambia Limited and Mpande Limestone Limited to revert to the pre-cartel prices ranging between USD 4.50 – USD 5 (K99 – K110) for a period of one year from the date of receipt of the Board decision pursuant to Section 59 (3) (b) of the Act.

“Additionally, that Lafarge Zambia Plc, Dangote Cement Zambia Limited, Mpande Limestone Limited submit monthly average ex-works prices and any price adjustments be indexed to the exchange rate and be submitted to the Commission for a review pursuant to Section 58 (1) of the Act,” the Board stated.

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The Board has further ordered the three cement companies to develop and implement compliance programmes in their respective firms within 90 days of receiving the directive.

“Furthermore, the Board has directed Lafarge Zambia Plc, Dangote Cement Zambia Limited and Mpande Limestone to make undertakings within 90 days of receiving the directive that their respective employees should not engage in any anti-competitive behaviour and that the enterprises should not facilitate and/or participate in any anti-competitive conduct including the exchange of information,” the Board stated.

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However, a check on Nigerian construction markets revealed that Dangote Cement sells for N3,500, while Lafarge sells for N3,400 – about double of what Zambians pay for the same commodity. Meanwhile, it is believed that going by this trend, there’s a need for something urgent to be done by the government to curtail the continuous increasing price of these products for the seek of Nigerian populace through federal Govt Master Plan for Low-income affordable housing policy. project.

Culled from: Ibadan Zone Shareholders’ Association

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