On The ‘Cement War’

IN recent weeks we’ve witnessed a price war with regard to cement.This is not part of a spate of promotional campaigns by various retail outlets.

It is a lot more than price-cutting. The traditional cement supplier, which recently changed its name, has been responsible for a very ‘unwholesome’ situation in the Namibian marketplace.For years, and up to a few weeks ago, the price of a bag of cement has been at a level that has not made a contribution to keeping the cost of construction at a reasonable plateau, and it has certainly not contributed to creating affordable housing for the masses.Instead, we have witnessed a steady increase in the price of cement.This same supplier has suddenly been compelled to reduce the cost of cement by as much as N$20 per bag, if not more.The reason for this dramatic turnaround has been the introduction of a new competitor, a new player in the market.The Brazilians have brought cement into Namibia at a landed price so low that it has compelled the traditional supplier to revisit its pricing strategy.If imported cement can cost N$20 per bag less, why have we been paying a premium for a product manufactured in the region? The answer to that is quite simple! Greed! Yes, GREED! Pretty much the same motivation that spurred the Avid players to indulge themselves.There was no rational reason for the high cost of cement.The only reason that prices were sustained at such a high level was bigger returns for shareholders, and that has certainly not been in the national interest! The traditional supplier has made no impact on lowering the cost of construction, and has made no contribution to alleviating the plight of those Namibians who desperately need affordable housing.On inquiring from the company about the sudden turnaround, I was informed that because a new player had entered the market they (the supplier) had to take care of their own interests.The question that every Namibian who has ever built, and those intent on building, needs to ask is; “who takes care of the consumer, the customer?” If the only reason for the sudden reduction in cost is that the traditional supplier has to “look after their own interest”, then it is quite clear that Namibia is a useful and profitable arena for marketing their product, exploiting the market sector, and nothing else.The fact that a Namibian joint-venture partnership with a Brazilian company, that will set up a new cement factory in Otjiwarongo, has been announced has set the cat among the pigeons and the current price war is the natural result of it all.It is despicable that a supplier of such an important component in the construction industry should have been permitted to exploit the country and its people for so long.But that just goes to show that healthy competition, and the breaking of monopolistic practices within the marketplace do, indeed, have a beneficial effect on pricing.This is yet another reason why Namibians should, when the new factory is up and running, support their local manufacturers and suppliers.There will be no need to support a company which for years has done little but live off the people of this country.With the writing on the wall there are bound to be very noticeable changes in the marketplace, and why, indeed, should we not buy “proudly Namibian products” when they become available? John Sampson WindhoekThe traditional cement supplier, which recently changed its name, has been responsible for a very ‘unwholesome’ situation in the Namibian marketplace.For years, and up to a few weeks ago, the price of a bag of cement has been at a level that has not made a contribution to keeping the cost of construction at a reasonable plateau, and it has certainly not contributed to creating affordable housing for the masses.Instead, we have witnessed a steady increase in the price of cement.This same supplier has suddenly been compelled to reduce the cost of cement by as much as N$20 per bag, if not more.The reason for this dramatic turnaround has been the introduction of a new competitor, a new player in the market.The Brazilians have brought cement into Namibia at a landed price so low that it has compelled the traditional supplier to revisit its pricing strategy.If imported cement can cost N$20 per bag less, why have we been paying a premium for a product manufactured in the region? The answer to that is quite simple! Greed! Yes, GREED! Pretty much the same motivation that spurred the Avid players to indulge themselves.There was no rational reason for the high cost of cement.The only reason that prices were sustained at such a high level was bigger returns for shareholders, and that has certainly not been in the national interest! The traditional supplier has made no impact on lowering the cost of construction, and has made no contribution to alleviating the plight of those Namibians who desperately need affordable housing.On inquiring from the company about the sudden turnaround, I was informed that because a new player had entered the market they (the supplier) had to take care of their own interests.The question that every Namibian who has ever built, and those intent on building, needs to ask is; “who takes care of the consumer, the customer?” If the only reason for the sudden reduction in cost is that the traditional supplier has to “look after their own interest”, then it is quite clear that Namibia is a useful and profitable arena for marketing their product, exploiting the market sector, and nothing else.The fact that a Namibian joint-venture partnership with a Brazilian company, that will set up a new cement factory in Otjiwarongo, has been announced has set the cat among the pigeons and the current price war is the natural result of it all.It is despicable that a supplier of such an important component in the construction industry should have been permitted to exploit the country and its people for so long.But that just goes to show that healthy competition, and the breaking of monopolistic practices within the marketplace do, indeed, have a beneficial effect on pricing.This is yet another reason why Namibians should, when the new factory is up and running, support their local manufacturers and suppliers.There will be no need to support a company which for years has done little but live off the people of this country.With the writing on the wall there are bound to be very noticeable changes in the marketplace, and why, indeed, should we not buy “proudly Namibian products” when they become available? John Sampson Windhoek