Mining

Chaos on Malawi cement market

October 12, 2020
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1,824 Comments

By Bester Kayaye in Blantyre, Tawina Maluwa in Lilongwe and Tawonga Nyirenda in Mzuzu

Cement prices in the country have drastically shot up by about 33% as local producers and importers continue to struggle to meet the growing market demand which has prompted traders to take advantage of the deficit and overcharge buyers.

A snap survey conducted by Mining and Trade Review in the cities of Lilongwe, Blantyre and Mzuzu revealed that cement is now a scarce commodity in shops and those shops stocking the commodity are selling it at very high prices.

In Blantyre, a 50kg cement bag is being sold within the price range of between K8,000 and K10,000 a hike from K6,500 to K8,000 before August.

In Lilongwe, a 50kg bag of which used to be sold at between K6,000 and K7500 is now being sold at between K7,000 and K8,500 while in Karonga and Mzuzu, the shortage of cement has become critical which has forced traders to raise the price of the dominant local brand Shayona’s Akshar from K6500 to K7500, the same price they are selling Tanzanian brands of similar strength, 32.5 Newtons.

Consumers and cement traders say they want government to intervene on the shortage of cement on the market which importers attribute to scarcity of foreign exchange to import the product.

Lilongwe based KH Dealer Cement Suppliers Shop Owner Sanjay Savjan told Mining & Trade Review that government needs to facilitate that banks release enough foreign exchange for importation of cement because the shortage of the commodity has affected their businesses as they are selling lesser quantities.

“We are making loses because we are not selling much due to the scarcity of the commodity. This has forced us to raise prices in order to make to profits,” Savjan said.

MD for Muhamad suppliers Muhamad Ali told Mining & Trade Review that the shortage of cement is a big blow to their customers who rarely find the commodity in stock.

“Customers keep coming to purchase cement but most of them fail due to high prices or that the brands they are looking for are out of stock. We do not know what the problem is with those that manufacture cement including local companies that are now failing to supply us with adequate quantities,” Ali said.

Bu Communications Officer for Lafarge cement Chikondi Ng’ombe said in a separate interview that the company acknowledges the shortage of cement on the market and they are doing everything possible with urgency to resolve the matter.

“Our prices remained largely flat with average increase of 3% recently in August to partially offset the kwacha devaluation against the US dollar. The excessive increases in prices being felt on the market are from traders unfortunately taking advantage of the supply constraints,” she said.

Ng’ombe also denied claims that part of the firm’s machinery had a technical fault which led to the shortage of cement on the market as alleged by other traders.

Executive Chairman for Cement Products Limited (CPL) Aslam Gaffar also said his company has not raised cement prices attributing the development to the weakening of the US Dollar which has resulted in the rise of cement prices in Zambia where Malawi mostly imports the product.

Gaffar said; “Zambian cement prices are high because prices have also gone up there. With such higher landed prices, traders can only make a margin of K100 per bag, which is not attractive to them, hence the rush to get local cement, with higher profits.”

“Imported Cement was being sold at very low prices, now this has changed and imported cement is selling at very high prices. Since our prices, as local producers, are still low, traders are scrambling for our cement and selling at the same price as the imported brands of similar strength thereby making profits in excess of K2000 per bag.”

“The problem is the traders, not us the producers. They are creating a shortage so as to make huge profits.”

MD for Shayona Cement Corporation Jitendra Patel said there is a need for the government to facilitate arrangement of finances for limestone license holders to bring new cement plants on stream because it is a risk to be relying on neighbouring countries.

“There should be regular monitoring of illegal practices and ensure that any local industries – not only cement – are given total fair support – Then Malawi has a good future,” Patel said.

Coordinator for the Chamber of Mines and Energy Grain Malunga also called on government to provide incentives to local manufacturers such as facilitating provision of low cost and long term loans to increase production capacity other than relying on imports which has resulted in the current market challenges.  

Minister of Trade Sosten Gwengwe, however, said his Ministry is holding discussions with the Reserve Bank of Malawi to prioritise issuing forex to cement importers to deal with the shortages.

Lafarge imports clinker from neighbouring countries while Shayona Cement has a clinker plant in Kasungu and CPL in Mangochi.

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