Zambia’s largest cement producer, Lafarge Zambia Plc has sited the over 40% Kwacha depreciation within one year as being one of the key reasons behind the recent hike in cement prices which has caused an uproar in the construction industry.
Responding to the Zambian Business Times – ZBT on why the timing of the most recent cement price hike is observed to have NOT coincided with other major cement manufacturing cost variable or determinants such as power, transport or fuel?
Lafarge Zambia Director for Communications and Human Resource Thecra Milambo told ZBT that “we recently decided to issue a price increase as a result of current macro-economic factors that the country is facing which have been exacerbated by effects of the Covid- 19 pandemic”.
She said that “due to these [macro economic] factors, our operation and input costs have significantly increased over the last six (6) months; the most notable being maintenance, transport and packaging material costs. Further, ZMW [Zambian Kwacha] has devalued by more than 40% since September of last year which also had a materially adverse impact on our production costs”
And when asked why Lafarge Zambia cement brands on the market have the highest retail prices and if this is their pricing policy, Milambo stated that “the retail prices for the cement sold on the market are not set by Lafarge Zambia, but the retailers set them. Lafarge generally cannot comment on the pricing or business strategies. However, it is true that lafarge recently decided to issue a price increase”.
And responding to ZBT on the question as to why this cement price hike coincided with other cement producers in Zambia and why low capacity producers are now retailing at the lowest price points?
Milambo stated that “Lafarge Zambia takes compliance with competition law very seriously. The company sets its prices unilaterally and primarily on the basis of cost escalation / inflation with the aim to ensure that our customers get the best quality at a fair price. Therefore, Lafarge cannot comment about the prices or strategies of other cement producers.
The steep increase in cement prices has raised alarm bells as it threatens to derail the massive infrustructure program being undertaken by government. Zambia also has a small active mortgage market with most individuals and local businesses resorting to self built housing and commercial projects.
Some contractors and cement retailers have told ZBT that if Cement prices are allowed to escalate by over 100% in one year like is the case now, more schools and hospitals as well as construction projects by individuals and the private sector will stall.
