BUA CEO Abdulsamad Rabiu Exposes Those Behind High Cement Price in Nigeria
- Nigerian billionaire Abdul Samad Rabiu has revealed that his company, BUA, reduced the price of a bag of cement to N3,500
- Rabiu revealed that dealers took advantage of the low price and sold the product with a high-profit margin to Nigerians
- The company was forced to reverse its prices due to the devaluation of the naira, exchange rate volatility, and the increased cost of business operations
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Abdul Samad Rabiu, the chairman of the board of directors of BUA Cement, disclosed that his company crashed the price of a bag of cement to N3,500.
Speaking at the 8th Annual General Meeting of the company in Abuja, Rabiu, however, revealed that the pricing was thwarted by dealers who exploited the situation, selling the same product at inflated prices of N7,000 and N8,000 per bag to Nigerians.
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He revealed that BUA Cement sold over a million tons of cement to dealers at N3,500.
His words:
"We were selling cement at N3,500 with the expectation that the dealers and the retailers would pass the benefits of the low price to the end-user customers.
“But a lot of the dealers took advantage of that policy, selling at N7,000 and N8,000 per bag. They made a lot of money from the very high margin. I think we had sold more than a million tons at N3,500 before we realised what the dealers were doing.
“So, we could not sustain that simply because we were not going to be in a situation where we are subsidising dealers.
Why is cement price high
Rabiu stated that the company’s current price is due to foreign exchange fluctuations and diesel, LNG, and spare parts costs.
He claimed that other manufacturers of cement products were also not ready to cut prices to make the product affordable to Nigerians.
Rabiu stated:
"So, we got to the point where the FX rate, the exchange rate, you know, deteriorated from when we decided to sell it at N3,500, which then the rate was about N450 to maybe N1,800 or N1,900 to $1. Many things are beyond our control."
“For whatever reason, other manufacturers were not ready to bring down the price. We were left alone and we could not satisfy the market at that level."
Dangote loses Africa’s richest spot
Earlier, Legit.ng reported that Nigerian billionaire Aliko Dangote lost his title as the wealthiest man for the second time in a month.
South Africa’s Johann Rupert claimed the top spot from the Nigerian industrialist after Dangote’s wealth declined due to a drop in the shares of his company, Dangote Cement.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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Source: Legit.ng
