Dangote demonstrates market leadership, sets stage for low-cost housing devt
Dangote Cement Plc has demonstrated to the world that leadership in either product or service market does not consist in just sheer size, but more in the capacity and readiness to make intervention in critical situations such the embarrassing housing and infrastructure deficit in Nigeria.
Nigeria’s low home-ownership level estimated at a little above 10 percent in a country of 160 million people coupled with a housing deficit put variously at 160, 170 and 180 million units is worrisome and this is further aggravated by deep infrastructure deficit that requires over N50 trillion to bridge.
Perhaps, it is no longer news that Dangote Cement has dragged down the price of its brand by as much as 40 percent to just N1,000 from N1,700 per 50kg bag. What is news instead, is that the company has, by this singular action, solved a major aspect of the housing delivery problems in the country.
Globally, Nigeria is adjudged one of the most expensive housing markets where prices at both the rental and sales markets are largely unaffordable by those who need housing, making homeownership an exclusive preserve of the rich and those who get money through questionable means.
The reason frequently given by estate developers including government agencies for the high cost of housing in the country is the high cost of building materials, especially cement which is a major input in housing development in the country where, traditionally, everybody opts for brick and mortar.
At this new price, expectation is that in the days and months ahead, construction activities at the low end of the property market would shoot up as low income earners, who had been waiting for a time like this, would move to site to build their homes.
Given the multiplier effect of increased construction activities in an economy, it is expected further that there will be improvement in household income as many jobs would be created for various skill sets including bricklayers, block moulders, carpenters, material suppliers and even food vendors.
“We recognise the need for a dramatic increase in the response to the huge infrastructure and housing deficit in the country, and one of the ways of addressing the issue is bringing the price of building materials down to much more affordable levels, especially cement which is within our own control ,” Devakumar Edwin, Dangote Cement’s Group Managing Director,said.
Edwin who spoke at the unveiling of their 32.5 grade and 3X cement in Lagos, at the weekend, explained that the price slash also became necessary as a response to the low per capita income of many Nigerians who desire to own their own homes but cannot afford the cost, adding, “the price slash underscores our commitment to support the development of infrastructure around Nigeria and boost ongoing efforts by the federal and state governments to reduce the high housing deficit in Africa’s largest economy”.
Linking the price slash to increased capacity built over the years, he noted that since the commencement of the implementation of the backward integration policy for cement in the country over 12 years ago, the local production capacity of the product has risen from less than two million metric tonnes per annum to about 38 million metric tonnes per annum today”, adding, “ during this period, over $20 billion has been directly and indirectly injected into the Nigerian cement industry, with Dangote Cement Plc accounting for 60 per cent of that spend”.
Edwin at the event attended by representatives of Standards Organisation of Nigeria (SON), Nigeria Institute of Architects (NIA), Block Moulders Association of Nigeria, and other stakeholders, stressed that with the new price regime, Dangote was building the future of Nigeria and Africa in general, adding that “this investment is helping to create employment and also help to better Nigeria”.
He advised end users of the product to look out for the 32.5 cement grade in green bag while the 42.5 grade is in blue bag, pointing out that whereas the 32.5 grade is used for only plastering, the 42.5 grade is used for general purpose building such as block moulding, decking, concrete casting etc.
In his brief remarks at the event, Joseph Makoju, Honorary Adviser to the President/ CEO of Dangote Group, Aliko Dangote, noted that the cement industry in Nigeria had come of age, explaining that the country has moved from being a net importer of the product to self-sufficiency and net exporter.
“Cement scarcity used to be news in this country, but it is no longer so; we are at a stage where end-users are getting benefits of the growth in the industry. There will be more efforts to take care of the customer. The new price comes with new capacity building and all these are aimed to stimulate demand, feed the construction industry and create jobs for construction workers”, he assured.
CHUKA UROKO