Business News of 2014-07-15

Block-makers reel from cement shortage

Block producers are reeling from the lingering shortage of cement, the main ingredient in their business whose cost has risen by close to 50 percent in the past few weeks.

Most block-makers interviewed by the B&FT said they have had to reduce production or close their business temporarily because of the shortage, which has been blamed on lower import volumes and a decrease in domestic production.

GHACEM Limited, the biggest producer of cement in Ghana, explained last week that while its own production remains the same -- about 58,000 tonnes a week -- the sliding cedi has compelled cement importers to cut the volumes they supply, while one other domestic producer is facing challenges in bringing in raw materials from Togo.

The country’s currency has lost 27 percent of its value against the dollar since the year began, slowing the business of importers bringing in items from cars to cement and groceries.

Nii Adjei Mensah, a block-maker in Accra, said the price of cement has risen from GH¢25 to GH¢35 within two months, compelling him to cut his output and raise the price of his products.

“Previously, I could produce 360 pieces of 5-inch blocks a day; but now the price has devalued my capital and I can only afford five bags of cement, which can produce only half what I used to.

“The price of cement determines the cost of the blocks, and now we are selling 5-inch blocks for GH¢3. It was GH¢2.30 before. Buyers always go away since they think the price is expensive.”

Another block-maker, Vida who operates her business in Weija, said she recently bought 20 bags of cement through a middleman since wholesalers did not have any stocks to sell to her.

“The dollar-rate has affected everything. The cement price has shot up persistently this week -- on Monday it was GH¢30, then it increased to GH¢32 on Tuesday -- and today's new price is GH¢35,” she said.

For Emmanuel Gbedife, a block-factory owner in Kasoa, Central Region, he’s had to lay-off some labourers because of lower production and sales.

“I cannot afford the higher price of cement. I had to lay-off some of my labourers just to save enough money to pay the ones working now. This has really affected production.”

The shortage and increase in cement cost is likely to affect the construction industry, which remains one of the fastest-rising economic sectors.

Against the backdrop of rising cost of living, the situation could also potentially slow down home-completion rates -- especially for workers who are forced to spend less on their building plans given the increase in other household expenses.