Plight of GHACEM: a case of killing local industries

GHACEM Limited, the only cement manufacturing company in the country, has for years stood with the country through thick and thin, in crisis and in stability. The company could be said to have been the backbone for Ghana’s reconstruction since its emergence on the Ghanaian market.

But recent events on the local cement market gives clear indications that the company would have to take some drastic measures or it would join the local manufacturing companies who have gone down the drain. Whiles GHACEM’s only competitor, WACEM enjoy tax exemptions operating in the country, the latter is expected, apart from honouring its taxes to the IRS, to also pay effective last month, a five per cent Import Duty on all its raw materials.

Many observers think the government is killing local manufacturing companies with the imposition of some taxes. Whiles WACEM is given a tax holiday to encourage its bringing of the Togo-manufactured cement onto the Ghanaian market, GHACEM is gradually being forced to fold up its operations.

It is a fact that with all their tax exemptions, WACEM is selling on the Ghanaian market at about the price as GHACEM who are currently under pressure to pay Import Duty thereby forcing it to increase its price to the disadvantage of the Ghanaian builder. The price of cement has shot up sharply after the 2002 budget, shattering the dreams of many Ghanaians who want to acquire their own houses.

Cement, which is one of the ingredients in the building industry, has seen a steady increase in price from ?7,000 in the early 1990s to ?35,000 in 2002 on the open market. Real estate developers, civil and building contractors, and even ordinary wayside masons, are all crying out for something to be done about the price of cement since it is collapsing their business.

The present cost of cement have also contributed to the hike in rents, making it difficult for low income earners to be able to afford a decent accommodation. Reacting to the concerns expressed by the general public to the increase in the price of cement, GHACEM Ltd., leader in the cement business in the country, in statement issued by its management said, the 2.7 per cent price adjustment of their product was due to a government imposed five per cent import duty on all imported raw materials used by the company for the manufacture of cement.

The new import duty, the statement said, takes retroactive effect from 18 March 2002 and was in fact embodied in the 2002 budget. GHACEM, it is said, has had a stable price over the years, going up slightly only when the value of the cedi had depreciated against the dollar because it enjoyed a zero per cent duty on her raw materials.

The statement said, Ghana unfortunately is not blessed with the basic raw materials for the manufacture of cement and therefore any levy imposed on the importation of clinker, the raw material for cement, would send the price sky high.

“GHACEM’s utmost policy is to keep cement prices in Ghana at a competitive and affordable level that is why our price is in fact the second lowest in the West African sub-region,” the statement added.

The statement assured the general public that the company is committed to building the nation and would not want to thwart government’s efforts at helping more Ghanaians acquire their own houses but in view of the present circumstance, GHACEM cannot do otherwise since her raw materials are imported and falls within the five per cent import duty bracket. The new ex-factory price of GHACEM cement, according to the statement, is ?31,113 including VAT.