Government to meet producers over cement price hikes

Speaking to The Citizen, the Permanent Secretary in the Ministry of Industry and Trade, Rajabu Salum, expressed deep concern over the sudden spike in retail prices, noting that state agencies are evaluating whether regulatory intervention is warranted.

“On Tuesday, August 18, we will meet with manufacturers to discuss the challenges and establish what is really happening. They say there is a shortage of clinker, so we need to hear from them directly,” he said.

Mr Salum said the government would also work with the Fair Competition Commission (FCC), if necessary, to determine whether regulatory intervention was required.

“If the issue is a shortage of clinker, we need to understand it so that we can also prepare the public. It is not possible for all retail shops to suddenly increase their prices to this level. It means there is a bigger problem that needs to be investigated,” he said.

Mr Salum said a government team was already assessing developments on the ground to establish the factors driving the increases.

He said the findings would guide the government in deciding whether further measures were needed to manage cement prices, including stronger regulation.

“We need to have regulations to regulate cement prices. We cannot simply watch prices continue to rise like this,” he said.

The intervention comes as consumers, traders and small-scale construction businesses face rising costs and supply difficulties.

A cement trader who produces and sells building bricks, Mr Leonard John, said he had gone two weeks without securing cement despite repeatedly visiting manufacturers.

“For the past two weeks, I have not been able to get cement. Whenever I go to the factory, I am told that the available cement has already been ordered,” he said.

Mr John said the shortage was disrupting his business because cement was a key input in brick production, forcing him to delay customers’ orders.

He urged the government to intervene before the situation worsened, warning that continued price increases would put further pressure on small businesses and consumers.

The concerns are supported by evidence of price increases at factory and retail levels.

A recent survey of cement prices from manufacturers found that a tonne was selling at an average of Sh321,251 before Value Added Tax (VAT), up from about Sh300,000 in June.

Since a tonne is equivalent to 20 bags of 50 kilogrammes, the latest factory price translates to about Sh16,063 per bag before VAT, or approximately Sh18,954 after VAT.

However, a survey by The Citizen found that cement was selling for as much as Sh26,000 per 50-kilogramme bag at some retail outlets.

National Construction Council (NCC) chief executive officer, Dr Matiko Mturi, acknowledged the increase, attributing it mainly to higher transport costs, strong demand and shortages in some areas.

He said the government was engaging the Ministry of Industry and Trade and other stakeholders to establish the factors behind the price movements and assess their impact on construction.

“Transport costs and demand are among the factors that can push prices up. When you add transport costs, which have increased, to the demand we are currently seeing, there are several factors that can cause the retail price to rise,” he said.

Dr Mturi said the average price of a tonne in Dar es Salaam had increased by about Sh21,000 since June.

“This means the price has increased by about Sh21,000 per tonne before VAT. It is not a very large increase, but it has gone up,” he said.

He noted that the impact became more significant after transport and distribution costs were added.

“Almost everywhere you go, there is construction taking place. We also have many roads being constructed, and some of them use concrete. So demand is really high,” he said.

Dr Mturi said the factory price alone did not fully explain what consumers were paying at retail outlets.

According to him, cement could leave a factory at about Sh18,900 per bag, including VAT, but additional transport and distribution costs could push the final price higher.

“If an agent transports the cement from the factory to his shop, he may add Sh1,000 or Sh1,500.

The price then reaches Sh20,000 to Sh21,000,” he said. Consumers buying small quantities and transporting them further from major distribution points could face additional costs.

“If a consumer buys a few bags and takes them further away, for example to Kitunda or Pugu, another Sh2,000 to Sh3,000 can be added,” he said, noting that transport charges had also increased considerably.

“Transport prices have increased almost twofold. Although fuel prices may have increased by around Sh1,000, some people have increased transport charges by more than that,” he said.

He also pointed to growing demand from major construction projects, saying this was putting pressure on supplies in some areas.

“Cement is not readily available in some areas because a lot of it is going to major projects. A retailer may wait for some time before getting supplies, and when the cement arrives, there are customers placing large orders. That can encourage the retailer to increase the price,” he said.

The price increase has raised concerns over the affordability of construction materials, particularly for individuals building homes and small-scale contractors with limited room to absorb higher costs.

The meeting is expected to clarify whether increases are driven by supply constraints, distribution costs, market demand or a combination.