Recent developments in the cement sector have raised concerns. Ever since BUA Group Chairman, Abdul Samad Rabiu, announced that his products would be sold at ₦3,500 per bag, it has sent shockwaves through the industry.
Initially, there was a flurry of media attention and debates on the feasibility of this price reduction. Much of this discussion seemed to be driven by industry leaders who felt threatened rather than external voices. When these attempts failed, rumors began circulating about BUA Cement being unavailable, again seemingly originating from the same sources.
However, upon investigation, it was discovered that BUA Distributors in Edo, Sokoto, and other areas have been purchasing their supplies at ₦3,500 per bag.
Mike Igwe, a distributor, confirmed that since the price reduction, he has consistently bought at this new price. He dismissed claims that BUA hadn’t implemented the price change, stating, “They don’t know what they are saying.” According to Igwe, other manufacturers have reasons to be concerned, as customers will naturally opt for the lower-priced option.
Igwe also suggested that the delayed supply to some parts of the country could be attributed to challenges like poor road conditions caused by heavy rains. However, with the rainy season subsiding, other regions should soon receive supplies at the new price. He speculated that BUA must have increased production to meet the rising demand as more buyers switch over.
Other distributors shared insights that Dangote, in particular, has faced intense pressure following BUA’s price reduction. Dangote has resorted to offering one free truck for every seven trucks purchased by distributors to retain customers. Yet, builders noted that this approach would not benefit retailers or consumers, as distributors would prefer to sell the free cement rather than give it away.
The reactions of Dangote and Lafarge to BUA’s decision to cut cement prices reveal their apprehension and the need for more compassionate business leadership.
Both organizations have adopted an approach of trying to pressure BUA rather than taking substantive measures to retain their market share.
It’s worth noting that sponsored analysts have emerged to challenge the practicability and sustainability of BUA’s price cut, a clear indication of the perceived threat from this move.
For Dangote, many distributors view this as an opportunity to move away from the company’s demanding payment practices. They mentioned difficulties in making cash payments and Dangote’s reluctance to refund in the event of price increases.
In contrast, BUA is more flexible, often supplying goods at the old price, even when there’s a price increase. This is particularly attractive in the current volatile market conditions, with BUA Cement considering further price reductions once they reach their 17 million tons per annum target.
Nigerians should urge other major cement manufacturers to follow BUA’s lead in reducing cement prices. BUA’s impact is evident in Dangote’s repeated denials of price increases.
Instead of reducing prices to benefit the masses, Dangote has opted to provide one free truck per seven trucks purchased. This intransigence will likely contribute to market volatility and unpredictability. Consumers may continue to face these challenges until the first quarter of 2024, when BUA achieves its 17 million tons per annum target and forces all manufacturers to drop prices to ₦3,000 per bag, as promised by Abdul Samad Rabiu.
Other cement manufacturers now face the dilemma of falling prices, with BUA Cement being supplied at the new price across the country.
