AbdulSamad Rabiu, Chairman of BUA Cement, has disclosed how his company’s attempt to sell cement at a reduced price of N3,500 per bag in 2023 was thwarted by unscrupulous dealers.
Rabiu explained that despite BUA Cement’s initiative to make cement more affordable for Nigerians, the company’s plan was severely compromised by dealers who took advantage of the pricing strategy by selling the cement at much higher prices, sometimes up to N8,000 per bag.
According to Rabiu, BUA Cement had successfully sold over a million tons of cement to dealers at the intended price of N3,500 per bag with the goal of making the product more accessible to the public. However, this effort was undermined as many dealers and wholesale merchants exploited the situation by marking up the prices significantly.
Instead of passing the savings on to consumers, these dealers sold the cement at inflated prices ranging from N7,000 to N8,000 per bag. This left BUA Cement struggling to control the dealers who were benefiting from the higher profit margins.
Rabiu also mentioned that the devaluation of the Naira and the removal of fuel subsidies were additional challenges that further complicated the maintenance of the subsidized price.
In his own words:
“So, a lot of the dealers took advantage of that policy. Rather than pass the low prices to the customers, they were selling at even double the price we sold to them.
“Some were selling at N7,000 and 8,000 per bag. They made a lot of money with a very high margin. I think we had sold more than a million tons at N3,500 before we realised what the dealers were doing.
“And then, because of the issues that Nigeria faced at the time about the devaluation of the Naira last year and the removal of fuel subsidy, we could not continue that policy.
“We wanted that price to stay at that level but dealers refused. So, we could not sustain that simply because we did not want to be in a situation where we are subsidizing dealers.
“I’m referring to the point when the foreign exchange rate moved from about N600 to maybe N1,800 to the US Dollar. So, it became even more challenging and more difficult for us to actually sustain that price policy.”
