Cement price surge to N16,000 stalls housing projects as FCCPC probes manipulation
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A 23 percent jump in cement prices this week to N16,000 per 50kg bag has stalled building work across Nigeria, prompting the FCCPC to investigate possible price manipulation by major manufacturers.
A 23 percent surge in cement prices this week has left private developers and prospective homeowners revising estimates and unable to complete properties, compounding an already severe national housing crisis.
Cement prices jumped to N16,000 from N13,000 per 50kg bag within days, according to buyers and builders. Jude Njoku, who is redeveloping a three-bedroom bungalow along the Lagos-Badagry Expressway, told BusinessDay he bought bags at N13,000 on Friday and was quoted N16,000 when he returned on Monday. Blocks have risen from N600 to N1,100, 30 tonnes of sand from N165,000 to N250,000, 30 tonnes of granite from N530,000 to N780,000, and a tonne of rebars from N850,000 to N1,150,000.
The Federal Competition and Consumer Protection Commission (FCCPC) said it has uncovered possible manipulation of cement prices following a three-month industry-wide investigation. Preliminary findings in a 40-page field report followed a cross-border study prompted by complaints over the high cost of cement, which is comparatively expensive in Nigeria despite substantial limestone deposits and reported surplus capacity.
Nigeria's installed cement capacity is about 62.8 million metric tons per annum. Publicly available estimates show three major undertakings account for more than 90 percent of installed production capacity: Dangote Cement with over 35 million metric tons annually, BUA Group with up to 20 million metric tons, and Lafarge Africa Plc (now HBM Nigeria) with nearly 12 million metric tons. The commission said major manufacturers made records available except one.
Estate surveyor and valuer Dimeji Aluko said the cost of building a modest residential house now requires almost double the financial commitment needed a few years ago, while the national rent-to-income ratio of about 70 percent is more than double the United Nations' 30 percent benchmark. In some Lagos areas, rents have surged by up to 200 percent over two years, with two-bedroom apartments averaging N2.5 million annually.
Analysts, including Bismarck Rewane, chief executive of Financial Derivatives Company, have described the housing market as a bubble heading for a correction, citing rising delinquency, mortgage defaults and excess inventory. The FCCPC investigation into cement pricing continues.