Accra, Ghana, March 5, 2019//-For decades all that most Ghanaians know for what is called cement is the one produced by Ghana Cement Factory (GHACEM).
After over 40 years of absolute monopoly of the cement trade GHACEM woke up one day to find West Africa Cement (WACEM) on the scene.
The hope of the people to enjoy the benefits of competition in the industry fizzled out when in 2012 WACEM had a temporary shutdown of its production plant – shortages occurred and prices rocketed up with supersonic speed. The temporary shortfall of some three million bags of cement over the period on the local market led to an overall retail price hike of 85 per cent from GH¢14 to GH¢25.
Ghana’s development partner, the World Bank, unable to sit by unconcerned at the critical situation within the country’s entire construction industry called for an end to the domineering hold on Ghana’s cement market by GHACEM and WACEM.
The Bank, uncomfortable with the continuous dominance of the two manufacturing companies – in the production and sale of cement in the country, called for urgent steps that would liberalise the market to engender competition and drive down prices.
Mr. Sebastien Dassus of the Bank did not see any justification for a monopoly in the cement market in Ghana as it made no economic sense. According to him, having a de-facto duopoly in the manufacturing and sale of an essential commodity like cement was not good for the country, especially given the rising housing and infrastructural deficit.
He told the media that with Ghana’s status as a developing nation undertaking many infrastructural projects, liberalising the cement sector would help drive down prices and create more jobs for the teeming youth; adding that when there was competition in the sector the better for consumers.
Reacting to the Bank’s admonition to the people, Dr George Dawson-Ahmoah, the Strategy and Corporate Affairs Director of GHACEM said the company was not enjoying any monopoly or duopoly with any cement company; recounting that the monopoly of GHACEM was broken 12 years earlier by WACEM, producers of Diamond Cement.
“Since then, other players have entered the cement market – Greenview International Limited, which operates in Tema Community 2; Savanna Cement at Buipe in the Northern Region and Fortress International, which imports bagged cement,” he said.
Dr Dawson-Ahmoah noted that Ghana had a trade liberalisation policy which allowed business entities interested to import any product or establish manufacturing units to do so, provided the rules and regulations are obeyed. He made it clear that GHACEM, the leading manufacturer and supplier of cement in Ghana, would not and could not prevent cement competition in Ghana, but would rather not hesitate to fight any competition which is on unfair grounds, stressing that competition must be fair and on equal terms.
“GHACEM is not afraid of competition but will resist any unfair competition imposed on them, even though it has not been GHACEM’s making that for the past 45 years the market has been slanted in its favour,” he said
He stressed that the company’s main preoccupation was to ensure adequate cement distribution in the market since it recognised the importance of cement in Ghana’s economic growth. .
Unhappy with the crisis both the President of the Ghana Real Estate Developers Association (GREDA), Dr. Alex Tweneboah, and the Chairman of the Technical Committee of the Association of Building and Civil Engineering Contractors of Ghana (ABCECG), Mr. Rockson Dogbegah, expressed grave concerns, especially in the light of the fact that a number of construction companies were laying off workers as a result of the crisis. The leaderships of both associations also linked the unfortunate development to the monopoly in the cement industry and expressed similar misgivings on the matter.
Additionally, the ABCECG noted that the government needed to break the de-facto duopoly rather than leaving the nation’s construction and building sector to the whims and caprices of the two companies.
“We need a conscious effort to get other cement factories into the system because where you have only Diamond Cement and GHACEM controlling the market, it means that builders and contractors will continue to be at their whims and caprices,” it stressed.
The Association said, “Currently, GHACEM comfortably controls close to 60 per cent of the market share. Diamond Cement, on the hand accounts for about 35 per cent of total cement sale and production bringing to over 90 per cent the stake of the two companies in the industry.
“Fears are that the dominance of the two companies in the sector, however accidental it may be, makes it possible for them to ‘technically’ determine prices of the product nationwide”, it pointed out.
The dawn of Dangote Cement into the country – with its quality but affordable product, brought relief to the suffering Ghanaian consumer who has to cough out more cedis to buy a bag of cement simply because the US dollar had sneezed or coughed. But for how long? A sustained campaign of vilification was waged against a company which many consumers acclaim for being price- stabilisers in the country’s cement market.
F or instance in 2016, the Cement Manufacturers Association of Ghana (CMAG), called on the government to stop the immediate importation of bagged Dangote cement from Nigeria. The reason being that Dangote Cement was making more dollars in Ghana via what they termed unfair trade practices which is grossly affecting their operations.
They said the Dangote cement which was in powder form and was being imported from Korea has been described as semi-unfinished cement and attracted only 10 percent import duty. They pointed out that the powdered cement being imported by Dangote was a finished product that could be delivered directly from the ship side to a customer for any construction work; hence the duty paid on it was inappropriate.
The CMAG added that imports by Dangote were made under ECOWAS Trade Liberalisation Scheme (ETLS) which opened the gateway for unfair trade practices that greatly affect the local producers
Explaining the allegations as mere wishful thinking, officials of Dangote Cement Limited said the prevailing stability in the prices of cement in the country could be attributed to the significant contribution of the company in the sector.
The Chief Executive Officer (CEO) of the company, Mr Tor Nygard, said as a customer-driven entity, its ambition was to become the most reliable supplier of cement in the country and
described attempts by the Cement Manufacturers Association of Ghana (CMAG) to create the impression that the company was involved in an unfair business practice as a smear campaign to create disaffection for the company
Mr Nygard expressed worry that a member of the association which had previously labelled Dangote’s highest grade of 42.5R cement brand as an inferior product also introduced a similar product in July, 2016.
“A member of the CMAG in an infamous Television commercial claimed our product was inferior, yet, today, they have been compelled by market trends to hurriedly introduce the 42.5R grade, although the product is more available in newspaper adverts and on billboards than on the market”, Mr Nygard said.
On the issue of non-payment of approved tariffs he stressed that, “We want to have it on record that we pay customs levies, Value Added Tax (VAT) and all other necessary taxes. The impression being created is that because of the ECOWAS Trade Liberalisation Scheme (ETLS), we do not pay any penny on our imports; this is inaccurate”, Mr Nygard stressed.
As to clinker importation he said, “It is important to note that Nigeria is producing its own clinker which is the raw material for the production of cement, and all the major cement manufacturers are importing clinker to Ghana. This is one critical reason a similar call for a ban on the importation of cement into Ghana is rather misplaced”,
“We at Dangote Cement have established ourselves in Ghana to offer the public an alternative to the present brands in the country, and it is up to the public to choose which brand they prefer to buy”, he stated, adding “We are not afraid of competition. We believe it is healthy and benefits the customer and we will continue to supply high quality cement at competitive prices to our customers.”
In August, 2017, President Nana Akufo-Addo while laying the foundation stone for work to commence work on the construction of a new cement grinding factory at Tema, debunked allegations of unfair trade practices levelled against foreign companies by some indigenous producers in the country’s cement industry.
He said, “I look forward to the construction of what we expect to be state-of-the-art cement grinding factory to diversify the sector, promote healthy competition and improve product standards” and assured the factory owners that his administration would continue to ensure that the sector gets the regulatory support and the business-friendly environment in order to thrive.
Looking at the country’s huge housing deficit, aside its infrastructural needs, which all need cement, no government must sit down unconcerned and fold its arms in the name of “Made in Ghana” for the people to suffer inappropriate prices at the hands of manufacturers
Sight must not be lost on the fact that governments are there not only to see to it that the people get jobs but also to ensure that consumers are protected – both in quality and affordability. Under no circumstance in trade liberalisation regime should companies be allowed to take advantage of the people.
Companies operating in the country must be told in clear terms that unfair trade practices are using co-efficient methods to fix prices unscrupulously high to milk customers dry. The country needs investors but not those whose activities are clandestinely detrimental to the people’s pockets.
By Oppong Baah, African Eye Report
