The Competition and Consumer Protection Commission – CCPC has disclosed that it has instituted investigations of top four (4) cement companies in Zambia for possible market abuse following the recent ‘uniform’ hike in cement prices on the market.
Cement prices are now an economically sensitive matter as the country is undertaking massive infrastructure projects of which cement is a key overall cost determinant. Moreover, the country has a housing shortage estimated at over 2 million houses, which individuals and private sector companies are constructing, all which relay in heavy cement usage.
A recent random market survey conducted by the Zambian Business Times – ZBT on July 29, 2020 across the top four cities in Zambia that include Lusaka, Kitwe, Ndola and Livingstone showed that cement prices have been increased by about 25 to 30% from as low as K98 for a 50Kg to K120 and K125 in the last three (3) weeks.
CCPC Director for Restrictive Business Practices Luyamba Mpamba Kapembwa confirmed to ZBT exclusively that the commission is currently investigating four cement companies which include Dangote Cement Zambia Ltd, Zambezi Portland Cement Ltd, Mpande Limestone Ltd (Sinoma) and Lafarge Zambia PLC.
Kapembwa further disclosed that CCPC has been investigating possible cartel conduct in the cement sector since 2019 when it carried out raids on four (4) cement companies and that the latest increment in the price of cement is also under investigation.
Kapembwa said good progress has been recorded so far concerning the investigations. And CCPC Executive Director Chilufya Sampa had earlier told ZBT that due to the sensitivity of the matter, the commission will be able to share the full findings at an appropriate time and inform the public on its findings.
ZBT’s random survey had shown that all major cement brands from Lafarge, Dangote and Sinoma had all increased the retail prices by a “similar margin” when they all have different cost structures, source of energy, age of manufacturing plants, technology used and limestone locations.
Some members of the public and cement manufacturing experts spoken to by ZBT indicated that the sector may be involved in suspected curtail behavior and the uniform increment and pricing is characteristic of that of market collusion to maximize their industry profits.
Cement prices on the market have continued to record an increase since September 2019 and most manufacturing companies had at those times attributed the increase to the depreciation of Kwacha and the hike in fuel pump prices, but this increment happened when the Kwacha exchange rate and fuel prices had remained fairly unchanged.
The recent cement price increase has come as a shock as it has not taken more than 6 months since the previous increment. Moreover, questions on what has triggered this hike remain unanswered as the as Kwacha has remained relatively stable and Fuel has not been increased since its last increment in 2019.
One of the industry players had attributed the gypsum shortage as the main cause of the increase but investigations and reviews done by ZBT revealed that the gypsum increase only accounts for a 5% increased on the back of the closure of Chambishi Metal which provided a cheaper source of the vital input.
