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Will discounted cement price speed up mass housing scheme plan

Published by The Nation on Wed, 13 Jan 2021


The dream of the government to build 300,000 housing units this year may have hit a rocky start with the spiralling price of cement, a major component in construction. Cement price, which made for the roof tops in the twilight of last year, has continued to soar, making permutations for an increased mass housing a likely charade. While cement manufacturers appear to be offering a discounted price for the commodity in relation to the mass housing scheme, there are divergent views on the actual solution needed to restore price stability in the industry, OKWY IROEGBU-CHIKEZIE reports.For the construction sector, developments in the closing days of last year were not palatable. The price of cement, a major component in construction, suddenly skyrocketed.Although no reasons were given for the hike, stakeholders said it had a correlation with the waiver given to two major cement manufacturers in the countryDangote Cement and BUA Cementby the Federal Government to ferry their products across the countrys closed borders at that time to the neighbouring countries.While there is a downward slope in cement prices globally, the same cannot be said of it in the country, as the price of the commodity has continued to soar. For instance, in some southsouth and southeast states, a 50kg bag of cement sells for as high as N4,500.Although this high price has doused the hope of the planned construction of 300,000 houses by the government, stakeholders contend that the planned price discount by cement manufacturers may be the panacea for lower prices.The planned houses, which will cost N2 million each, is being bankrolled with the Central Bank of Nigerias (CBN) funds which has an initial N200 billion facility.The project, according to Vice President Yemi Osinbajo, is part of those being executed by the Economic Sustainability Plan (ESP). It is expected to begin in 20 states.In an update on the Social Housing plan of the ESP, the office of the Vice President said more than 20 states, including the Federal Capital Territory (FCT), have already expressed interest in the programme, including others which have offered free land for the construction of the houses.Some of the states that have already supported the implementation of the scheme, which will offer houses at low prices of between N1.8million and N2million include the Osun, Ogun, Enugu, Delta, Bauchi, Kebbi, Nasarawa, Plateau, and the Federal capital Territory (FCT), where the first set of construction sites have been indicated.Others like Abia, Anambra, Ebonyi, Imo, Cross River, Sokoto, Kaduna, Zamfara, Katsina, Borno and Yobe states are working towards joining.In a statement, the promoters of the scheme, explains: Under the ESP Social Housing Plan, 300,000 low cost houses would by itself create 1.8 million jobs in the housing sector and beyond, while as indicated under the ESP approved by the President and the Federal Executive Council, the Central Bank of Nigeria has committed N200billion facility for the Social Housing. To achieve these goals, the Family Homes Funds has been appointed as the implementing agency for this initiative and it will construct 300,000 housing units across the country.Osinbajo stated that to kickstart the social housing projects, the CBN is committed to a N200 billion facility and most of the sites where the housing project will start have been identified across various geo-political zones by the Federal Government.He said: To achieve the low-price points being targeted, a model design has been produced for the one-and two-bedroom houses against which a sample house has been built to demonstrate the costings. The form of financial assistance that will be made available to Nigerians include mortgage loans at low interest rates.He said financing would be arranged through the designation of a Homes Warehousing Agent that would purchase the completed homes from the developers. Individual buyers would then purchase homes from the agents. He added that Family Homes Fund Limited (FHFL) has mobilised cooperatives and other such organised groups across the country as the main off takers for the homes.For instance, FHFL recently met with 93 Cooperative Leaders from the six geographical zones, under the aegis of the Co-Operatives Federation of Nigeria. A Housing Portal that allows all interested parties in the scheme to get more information on the programme and express was launched on December 16, 2020. Possible interested parties include individuals and organised groups interested in home ownership under the scheme, as well as delivery partners including developers, young professionals in the building industry, suppliers, and manufacturers.On job creation under the social housing project, he said jobs would be created from the local production of building materials and housing input such as doors, windows, hinges, frames, cement, and paints.According to him, about 1.5million doors would be needed, 1.8million windows, 7.8million hinges, among others.He said the building sites would also function as factories for the manufacturing of these house input to increase production of building materials and save costs on the building products import.The social housing project will also employ both the services of established developers and young small-medium scale professional contractors (architects, engineers, quantity surveyors, accountants, etc). These groups will in turn employ the needed artisans, he added.Not to be left out of such a huge government project, cement manufacturers agreed to discount cement prices for the construction of houses under the ESP.They said that it is their way of supporting the governments effort to provide social housing to vulnerable Nigerians.Commending their efforts Osinbajo said: They have agreed to give cement for this project at a considerable discount which is a very helpful thing to do and we really commend and thank them for the contributions they are making. It is a very patriotic thing on their part. They also see the importance of this Mass Housing Programme.But some professionals and operators in the construction sector have diverse opinions. For instance, the Managing Director, Ethical Business and Management Associates, Afolabi Adedeji, commending the manufacturers for the discounted cement, advised the government to refrain from controlling the price of the commodity. He argued that doing that would distort the market.Adedeji, civil engineer, said: I will advise they discount but not in any way forced to sell below their production cost as it will distort the market and create a black market. To encourage the manufacturers to do more, the government should work more on tax incentives, tax holidays and the provision of needed infrastructure that will bring down their cost of production.He urged the government to explore other building materials options and methods to discourage the emphasis on cement and certain people holding others to ransom, he added.According to Adedeji, there is the need to explore other building materials such as timber. He lamented the attention being given to construction, noting that cement is only one of many important components used in construction, especially houses.Also, President, Nigeria Institute of Town Planners ( NITP ), Mr Toyin Ayinde said what the construction industry needs is not a mere discount but rather intervention, adding that cement, though a major component in construction, is only one among several.Ayinde, a former Commissioner for Physical Planning & Urban Development in Lagos State, said: Recall that our inflation is already above 14 per cent, and that is not encouraging for the industry. Im not certain if theres a necessity for commending manufacturers for offering some discounts because it is the consumers who still feel the pain of the high price (never mind the so-called discount). Im not sure also if it would be right for the government to compel a reduction of price of what it doesnt produce. I think what the government should do is to look into the application of trade policies at the ports and borders, the supply and cost of providing electricity and transport costs, all of which have an impact on cement production and sale.Furthermore, he stressed the need to look into the protectionof local industry when that local industry is unable to satisfy the local market or demand.According to him, the law of supply and demand informs that when theres not enough to supply, prices soar. These are complex interactions that need to be resolved by thinking through the issues and dialoguing with stakeholders to find a way out, he added.
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