Cost of living is soaring. First, prices of building materials have skyrocketed in the last two months. Checks in markets show a 70 per cent increase in prices of critical materials way beyond what obtained in 2022.
A 50kg bag of cement now sells for N5,000 and more depending on where the purchase is done. Even in Lagos and Ogun markets, where Dangote Cement company and Lafarge operate production plants, the price is not remarkably different. And that is curious because proximity to industry should benefit host markets. I’m not talking of Corporate Social Responsibility (CSR) but certain price advantage that neighbouring markets should reflect.
Manufacturers don’t exert as much energy and resources to reach proximate markets. But that economic logic has not worked, either in Lagos, Ogun or any other community where cement plants are sited. The major point is that prices of this vital commodity have gone up and consumers are choking.
In time past, the explanation for steady rise in price of cement used to be cost of haulage, especially after the diesel market was deregulated and the price became prohibitive. Diesel is still costly today, selling above N800 per litre, but manufacturers just got used to it or find ways to pass the extra cost to consumers. Power is always a headache for big producers since public supply had become problematic over the years.
Despite privatisation nearly 10 years ago, both GenCos and DisCos have proved very unreliable for non-stop production of goods. Firms had to shop for private supplies and pass the cost to consumers. Yet, a bag of cement did not get to N5,000. Now, the removal of subsidy for Premium Motor Spirit (PMS), that is petrol, has compounded the challenges for manufacturers and all of us.
Despite these challenges, cement producers still post hefty profits. They also pay good taxes to government. Governments pocket the taxes and offer consumers no protection from dizzying prices. Meanwhile, this is one product of which we’re proud to have attained 91.48 per cent local content.
So, significant backward integration has been achieved apart from forex to source and maintain the machinery. If government were to be alive to its responsibilities, by making available efficient energy and quality roads or railway for seamless supplies to end users, cement shouldn’t cause Nigerians sleepless nights.
The country is blessed with abundant limestone, marl, calcite, shale and gypsum. The Nigerian Geological Survey Agency in 2022 disclosed that the country is endowed with about 10.6 billion tons of limestone resources embedded in 14 states – Gombe, Benue, Kogi, Edo, Oyo, Ogun, Cross River, Ondo, Plateau, Bauchi, Akwa-Ibom, Enugu, and Ebonyi.
The country is also rich in gypsum, another raw material for cement, to the tune of 1 billion tons deposited in Adamawa, Anambra ,Bauchi, Bayelsa, Benue, Borno, Delta, Edo, Gombe, Imo, Kogi, Ondo and Sokoto states. Despite these advantages, we are where we are because government and operators are yet to decide whether Nigerians deserve to breathe freely.
We remember that states and the Federal Government used to own cement companies. They were told that government had no business doing business. Most of the governors cannot account for what they did with what they were paid to transfer ownership.
Latest rent survey across the country showed a 40 per cent rise in rents for the first half of 2023. Inflation, cost of building materials, low supply of housing stock and sundry challenges are responsible for the rise. Apartments in major cities have gone beyond what ordinary citizens can aspire to let, going by stunted incomes and naira devaluation. For citizens who are outside government and are not entitled to official residence, especially young people that are just starting out this is added cost to their list of worries for the year.
By Thursday last week, there were stories to the effect that price of cooking gas would go up this week. The truth is, it had gone up as at last Tuesday. A 5kg cylinder sold for N3,900 at some refill points in Lagos, after it sold for N3,600 in June/July. I guess it’s market forces at work.
Prices of food items have remained in upward swing since June, despite the onset of harvest. Bread, beans, rice and other staples have remained costly, with merchants blaming inflation and transportation.The subsidy toll is touching every sector of the economy. It is understandable that certain food items (grains) are harvested once in a year after the rains. Substantial part of it is then stored and released for the markets before the next planting season. The insecurity situation around farming belts in the north has constrained capacity and volume.
But the major trigger this time is the removal of fuel subsidy. President Tinubu has promised to release 200,000 Metric Tonnes of grains from strategic reserves to households (I don’t know how many of us 200 million plus will benefit) across the 36 states and FCT. Citizens are waiting to see and feel the impact this would have on food inflation in the next two to three weeks.
One major headache for travellers and haulage companies in these trying times is the hopeless state of roads and it must be emphasized. At this time every year, most federal roads are in a mess, if not outright impassable. States’ roads are not better, but those appropriated by the Federal Government get noticeable because they criss-cross states and link heavy business districts such as ports, refineries, border communities and trade zones.
I don’t understand the logic for allocating these Trunk A roads to the Federal Government, but that is not even the issue. The matter at hand is that the roads are not adequately repaired despite yearly budgetary provisions. This has been the case since 1999 and sometimes, states pick quarrel with the central government over these roads.
At a time, states were allowed to maintain federal roads in their domains and get reimbursed after ascertaining what was spent. That was discontinued perhaps because of lack of trust when states come with bogus and outrageous claims. But the solution is not to discontinue a process that worksand is mutually beneficial. If states have capacity to fix roads when the Federal Government is not ready, the ultimate beneficiaries are citizens who use the roads. That will eliminate rancour and allow the people place culpability where it belongs.
But there is a prevailing situation where states accuse the Federal Government of not allowing them to fix bad roads that endanger road users and hamper business on the excuse that such roads are federal roads.
Edo State Governor, Godwin Obaseki, said he was stranded with dilapidated federal roads in his domain, the Benin-Sapele and Benin-Auchi highways, which he is unable to fix because of conflicting federal policies. He lamentedthat the policy is frustrating his efforts and when he attempted to fix the Auchi-Ibillo road and the Benin-Sapele road, he is not allowed because the Federal Government claimed it had given them to contractors.
Obaseki is not alone in this. I know of other governors who endure similar frustration. Once upon a time, Tinubu as governor had to use billboards to identify and lament the poor state of federal roads in Lagos. He did that to mock the PDP Federal Government. Yet, in the eight years of Buhari and Tinubu’s APC administration, federal roads in Lagos were most miserable. The most shameful is the Lagos-Abeokuta expressway that traverses Ikeja Along-Abule Egba-Toll Gate. The Abule Egba-Toll Gate (border with Ogun State) stretch of the expressway, is dead. The road died all through the eight years when Babatunde Fashola was Works Minister. This is Lagos, not Sapele and nobody cared.
The East-West-road is in a mess as well, thoroughly ravaged by the heavy flooding of 2022 and poorly handled since 2006 when former President Obasanjo awarded the first contract. The Abuja-Kaduna expressway suffer same fate among other critical federal highways in the North. Each year, attempts are made in the National Assembly to appropriate funds for these highways, but the releases are always woeful due to low revenues, leading to huge contract variations and abandoned projects. Citizens are toiling and agonizing across the country over failed infrastructure, now compounded by fuel price hike.
Hopefully, the Infrastructure Support Fund (ISF) initiative approved by president Tinubu will make funds available to fix roads and intervene in other critical areas. Hopefully, the model will resolve the misunderstanding on management of federal roads traversing states.
Prices of pharmaceutical products and essential medicines are also getting out of reach of citizens, especially aged persons and pensioners who need them to remain fit. Reports say some medicines are getting out of stock or have become expensive due to inflation because up to 60 per cent of drugs are imported. Government’s promise to reduce importation numbers has remained at the level of theory because the pharmaceutical industry is yet to attract the level of investment required to compete with manufacturers from Asia.
The story is shared of deliberate efforts by the pharmaceutical industry in some Asian countries to take advantage of the population here to market their products. They woo potential manufacturers with enticing trading incentives, instead of encouraging them to go into production. The Indian government encourages manufacturers with energy and infrastructure in ready-to-use industrial zones, with export promotion incentives.
But here, governments collect taxes from manufacturing companies without providing infrastructure for enhanced local production and backward integration. Thus, when you leave essential medicine for market forces to determine, prices go haywire.
The World Bank is aware of the progress ongoing in India. But they have a different message for us here.
Let’s be wise!