Why building materials in Tanzania now cost more

Dar es Salaam. The government yesterday directed manufacturers, distributors and traders of construction materials to bring down their spiraling prices.

This comes amid reports that prices of cement, steel bars and roofing sheets have gone up during the past few months in a rise that analysts link partly to the ongoing construction projects being implemented through the use of Covid-19 donor funds.

Last year, the government received $576 million (about Sh1.3 trillion) from the International Monetary Fund (IMF) to help cushion Tanzania’s economy against some of the impacts of Covid-19 pandemic.

Part of the money has been channeled toward construction of regional Vocational and Education Training Centres (Veta) and classroom blocks across the country, which may have likely exerted pressure on prices of such products.

Manufacturers who spoke to The Citizen on condition of not being named, say the price rise was also precipitated by an increase in the costs of raw materials amid Covid-19 that has affected entire supply chains in unprecedented ways.

But that aside, the Investment, Industry and Trade minister Ashatu Kijaji yesterday directed businesses to set prices of the products based on the actual costs of production and transportation.

Dr Kijaji directed all regulatory authorities to put to task hoarders and users of black markets.

“Products should reach the market on time and with competitive prices,” noted the minister.

Dr Kijaji also directed the responsible authorities to take severe measures against competitors who were colluding to bring prices up.

“This is economic sabotage which the government will not tolerate,” she warned, directing producers to raise production in line with their installed capacities.

Minister Kijaji also directed producers to set a good distribution system that will provide no room for unscrupulous traders to hike prices.

She also directed all regional trade officers to closely monitor price trends of various products in their respective areas and present reports to her ministry on the regular basis.

Tanzania Private Sector Foundation (TPSF) executive director, Mr Francis Nanai, said engagement was the best way to deal with a sort of ‘misunderstanding’ between the government and the private sector.

He believes that in a free market economy and if other things are held constant, prices should be determined by market forces of demand and supply, and not otherwise.

However, he said if there were any allegations of collusion, it could be investigated and severe measures be taken against dishonest traders.

“We do not condone collusion because it is economic sabotage” noted Mr Nanai.

“However, this should be dealt with fairly and peacefully and that is why engagement here is important for evidence-based decisions.”

A source privy to the topic but who preferred not to be named said the soaring prices of construction raw materials was not a result of the hoarding tendencies among manufacturers and traders, but rather rise in operational costs.

He said the costs of raw materials for construction were high, with some reported to have gone up by 400 percent.

He said prices of scrap metals that are an important source of industrial inputs, jumped to Sh1,000 per kilogramme compared to Sh200 in the previous months. Furthermore, the cost of some imported raw materials for reinforced bars climbed up to $750 per metric tone (tonne: about Sh1.7 million) compared to $420 (about Sh966, 000) a few months ago.

Further, he said, raw materials for roofing sheets were untouchables.

“We recently had a meeting with the government and shared with it about what was driving up prices,” a credible source said.

Saying: “I don’t know what was considered for the government to come up with such directives requiring a cut in prices,” Mr Nanai said.