Local cement producers operations stifled by competition

Local cement producers in the country have in the past months complained bitterly to government over unfair competition by importers of cement from other countries as well as the operation of Dangote Cement.

This has brought untold operational difficulties on local cement producers since the market does not favour their operational cost.

Direct effect of the situation is that, Diamond Cement, one of the older local cement producer’s in the country has threatened to lay off a significant number workers.

The Diamond Cement Company served notice that, it will lay off 50 percent of its staff due to the inability of the company to sustain its operations.

According to the company, it is utilizing only 43% of its production capacity despite the 1000 direct and indirect staff strength.

“Just last month, I was compelled to sack 10 people from the marketing department in Tema because I couldn’t sustain the company’s operations. Since I am running at a loss, I cannot continue to keep the marketing staff in the company. Whatever decision that we decided to take has been and that is exactly what we will be doing,” General Manager for Diamond Cement, Tati Ramarao threatened.

He added, “Actually we are so sorry with the decision to sack people home but we have no other option.”

Mr. Ramarao also chastised the Trade Ministry and government for what he described as their lack of commitment to solve the issue of unfair competition in the manufacturing space.

“We are suffering a lot even though we have written several letters to the Ministry of Trade. There have been promises but we have seen nothing from the state. There is neither implementation nor action at all; the situation is the same and the competition keeps getting worse,” he stressed.

The concerns by the local cement manufacturers have been intensified within the past few months as they fear the imminent collapse of their businesses.

A recent decision by the Trade Ministry to allow Korean cement company, Fujian, to export 500 thousand tonnes of cement to Ghana was also met with stiff opposition by the local manufacturers.

The Ministry has since defended its decision citing the insufficient supply to meet demand.

Some consumer interest groups and the importers association have however insisted that the country allows the importation of foreign cement to control pricing and avoid monopoly in the sector.

However, President John Mahama has said his government will ensure Dangote Cement competes fairly in the Ghanaian market if investigations by the Ghana International Trade Commission find that the Nigerian cement company is enjoying certain subsidies and tax holidays in Africa’s most populous country, which give it certain advantages over local cement manufacturers in Ghana.

Local manufacturers GHACEM and Diamond Cement have made complaints to cabinet about unfair competition by Dangote in Ghana. They say Dangote is selling below competitive prices.

The president gave the assurance when he took his turn on the GBC’s Encounters with presidential candidates last week.

Mr Mahama said Dangote brings bagged cement into Ghana under the Ecowas Trade Liberalisation Scheme (ETLS) which allows members states to export finished products into each other’s country.

“We’ve received a complaint from the local cement producers saying that the entrance of Dangote Cement is affecting them and that Dangote is selling at prices that are below competition. … Now we’ve passed the Ghana International Trade Commission [bill] which is the body responsible for such complaints and so the matter came to cabinet, we’ve discussed it and then we’ve asked the trade minister to put it before the Ghana International Trade Commission … so I’m sure the first complaint they’ll get is on cement and what they’ll have to do is to find out what makes Dangote able to sell below competition. Is it that they are getting some subsidies in Nigeria, which is the accusation our cement manufacturers are making? … Or they are being given some tax waivers that our producers here don’t have?

“I don’t have that information and so the right body to investigate is the Ghana International Trade Commission … and if it is found that Dangote is being subsidised by the Nigerian government … or they are being given some waivers that make them more competitive and able to sell lower, then we might have to adjust the tariffs on their cement to reflect that and improve the competition between us. … We cannot stop the competition because of the ETLS but we must make sure they are playing by the rules so that they don’t have an unfair advantage over our people,” Mr Mahama added.