The Chairman of BUA Cement Plc, Abdulsamad Rabiu, has revealed that efforts by his company to sell cement at N3,500 per bag last year were thwarted by cement dealers who exploited the situation for personal gain.
Speaking at the 8th Annual General Meeting of the company on Thursday, Rabiu explained how the dealers’ greed, coupled with economic challenges in Nigeria, led to the collapse of this pricing strategy.
Rabiu shared that BUA Cement had initially intended to lower cement prices to as much as N3,500 per bag in a bid to make the essential building material more affordable for consumers. However, this plan was undermined by dealers who chose to profit excessively rather than pass on the lower prices to end-users.
“So, a lot of the dealers took advantage of that policy. Rather than pass the low prices to the customers, they were selling at even double the price we sold to them,” Rabiu stated.
“Some were selling at N7,000 and N8,000 per bag. They made a lot of money with a very high margin.”
Rabiu went on to disclose that BUA Cement had sold more than a million tons at the reduced price of N3,500 before realizing that the dealers were inflating prices to the detriment of the public. This situation, according to him, was further compounded by the economic challenges Nigeria faced in 2023, including the devaluation of the naira and the removal of the fuel subsidy.
“And then, because of the issues that Nigeria faced at the time about devaluation of the naira last year and the removal of fuel subsidy, we could not continue that policy,” Rabiu explained.
“We wanted that price to stay at that level, but dealers refused. So, we could not sustain that simply because we did not want to be in a situation where we are subsidizing dealers.”
The revelation sheds light on the complexities of market dynamics in Nigeria, where factors such as currency devaluation, subsidy removal, and intermediary profiteering can significantly impact consumer prices.
Despite BUA Cement’s efforts to reduce costs for consumers, the challenges posed by these external factors proved too significant to maintain the lower price point.
As the Nigerian construction industry continues to grapple with high material costs, the situation underscores the need for improved market regulation and monitoring to ensure that pricing benefits intended for consumers are not eroded by intermediary actors.