At the 8th Annual General Meeting of BUA Cement held in Abuja, AbdulSamad Rabiu, Chairman of BUA Cement, unveiled the company’s failed attempt to reduce cement prices for consumers, thwarted by cement dealers capitalizing on significant profit margins.
Rabiu disclosed that BUA Cement aimed to alleviate the financial burden on consumers by selling over a million tons of cement to dealers at a price of **N3,500 per bag**. The strategy was designed with the intention that these savings would be passed on to end-users, allowing for more affordable access to cement across the country. However, the plan was not realized as expected.
Instead of reducing prices for the consumers, dealers took advantage of the company’s goodwill, selling the cement at **N7,000 to N8,000 per bag**—a markup of more than 100%. This exploitative behavior by the dealers not only frustrated BUA Cement’s efforts but also forced the company to discontinue its price reduction policy.
Rabiu explained the rationale behind discontinuing the policy:
>”We realized that many dealers were profiting massively from our price reduction initiative. Rather than passing the benefits to consumers, they sold the cement at double the price we provided, making substantial profits at the expense of the end-users. We sold over a million tons at N3,500 before we discovered this.”
He further elaborated on the economic challenges that compounded the situation, citing the devaluation of the Naira and the removal of the fuel subsidy, which significantly affected the company’s ability to maintain its pricing strategy. The drastic shift in the foreign exchange rate, from around **N600 to N1,800 to the US Dollar**, increased operational costs, making it even more challenging to sustain the price cut.
Rabiu stressed that BUA Cement’s intention was never to subsidize dealers, highlighting that the company had no control over how dealers priced cement in the open market. The dealers’ substantial profit margins, driven by the high resale prices, were not in line with the company’s initial goal of making cement more affordable.
>”Our objective was to support the market and make cement accessible at lower prices, especially considering the economic hardships faced by many Nigerians. However, the unwillingness of dealers to adhere to this pricing model, coupled with the economic conditions at the time, made it unsustainable for us to continue,” Rabiu explained.
Rabiu’s revelations have sparked a broader discussion about market regulation and the role of intermediaries in Nigeria’s construction industry. It underscores the challenges manufacturers face in ensuring that their pricing intentions benefit the intended consumers, rather than lining the pockets of intermediaries.
As Nigeria continues to navigate its economic challenges, Rabiu emphasized the need for better regulatory measures to protect consumers and ensure fair market practices. BUA Cement remains committed to finding ways to make cement more affordable while navigating the complex dynamics of the market.
In conclusion, the Chairman reiterated BUA Cement’s commitment to supporting the construction industry and contributing to Nigeria’s economic development, despite the challenges posed by market forces beyond the company’s control.
