Business News Thu, 13 Oct 2016

Competition forced cement price drop in Ghana – Trade Ministry

The Minister of Trades and Industry, Ekow Spio-Garbrah has explained that prices of cement in the country have reduced appreciably due to moves by government to boost competition in the sector.

Spio-Garbrah has come under pressure from the Association of Cement Manufacturers of Ghana (CMAG) for approving the license of some foreign companies to import about 500,000 metric tonnes of cement into the country.

The association argued that the minister acted illegally when he deliberately issued the permits to SOL Cement from China and Fujian from Korea to import the products into the country and further complained that the decision will virtually push them out of business.

But speaking on the Citi Breakfast Show on Thursday, Spio-Garbrah said the row over his decision is unnecessary.

“…by the time cement comes into Ghana, because of tariff, duties and levies and also the profit margin cement companies are putting on it, the prices tend to be in the GHc28 to GHc30 range. But between manufacturers and importers our own view is that cement prices should keep coming down and these last few days we’ve had some news report about cement prices coming down.”

The Minister attributed the report entirely to competition saying “the manufacturers realized that there is competition.”

“Dangote for example is providing a lot of competition to the Ghanaian manufacturers some of whom have had the monopoly situation for close to 30 or more years and are not used to competition and their natural reaction is to run to the media and throw a lot of dust in the air to seem as if somebody is doing something wrong.”

He also explained that government did a thorough job before passing the Legislative Instrument which empowers the Ministry of Trade to regulate the cement sector.

“…in order to manage and regulate the cement sector we had a cabinet document on this that was approved, we had legislative instrument passed on Parliament which was also debated at length by various parliamentary sub-committee before it was passed. The objective was to have the Ministry of Trades and Industry through the Minister decide on the periodic issue of how much cement should be imported into Ghana at any particular time and it will approve licenses for particular importers,” Spio-Garbrah added.

Spio defends cement regulation

Dr. Spio-Garbrah had earlier clarified that the regulation on cement importation was to control importation of such products onto the Ghanaian market and not to totally ban them as being asserted by cement manufacturers in Ghana.

Cement prices drop

The price of cement early in October dropped slightly on the market.

The Daily Graphic reported that Dangote Cement Ghana Limited was the first to drop its price in September, following which GHACEM Limited reduced its price by about the same margin of GHc1 per 50KG bag of the product.

Source: citifmonline.com