Why Zambia Govt Ordered Dangote to Reduce Cement Cost

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Why Zambia Govt Ordered Dangote to Reduce Cement Cost
Obiajulu Joel Nwolu

The Zambia Board of Commissioners of the Competition and Consumer Protection Commission has said it ordered Dangote Cement Zambia Limited alongside the Lafarge Zambia Plc and Mpande Limestone Limited to peg cement price between Kwacha 99 to Kwacha 110 following public outcry over its recent hike.

The Dangote Cement Group sells its product at a maximum of Kwacha 110 which is equivalent to about N1,800 in Nigeria, while the company sells the same product for not less than N3,500 in Nigeria.

According to the Board, it also fined Lafarge Zambia Plc and Mpande Limestone Limited 10% of their annual turnovers for the year 2019 and another 10% of their 2020 yearly turnovers for price-fixing and division of markets.

Dangote Cement Zambia was, however, spared for having cooperated with the commission during investigations.

The decision to fine Lafarge Zambia Plc and Mpande Limestone Limited was made during the 49th Board of Commissioners Meeting for the Adjudication of Cases held in Lusaka on March 30, 2021, Zambia News reports.

This was after an exhaustive investigation by the Commission initiated in January 2020 following the Commission’s observation of a sustained increment of cement prices from an average of K55 to K100 per 50kg bag between July 2019 and January 2020.

The continuous price increment of cement by the parties led the Commission to suspect that there were possible collusion and an agreement to fix the cement prices and the Commission carried out investigations for a year.

Nanukolo Kasumpa, the Senior Public Relations Officer, in a statement said the Board has also ordered Lafarge Zambia Plc, Dangote Cement Zambia Limited and Mpande Limestone Limited to revert to the pre-cartel prices ranging between USD 4.50 – USD 5 (K99 – K110) for one year from the date of receipt of the Board decision pursuant to Section 59 (3) (b) of the Act.

The Board said, “Additionally, that Lafarge Zambia Plc, Dangote Cement Zambia Limited, Mpande Limestone Limited submit monthly average ex-works prices and any price adjustments be indexed to the exchange rate and be submitted to the Commission for a review pursuant to Section 58 (1) of the Act.”

“Furthermore, the Board has directed Lafarge Zambia PLC, Dangote Cement Zambia Limited and Mpande Limestone to make undertakings within 90 days of receiving the directive that their respective employees should not engage in any anti-competitive behaviour and that the enterprises should not facilitate and participate in any anti-competitive conduct including the exchange of information,” the Board stated.

A market survey by SaharaReporters in Nigerian construction markets showed that Dangote Cement sells for N3,500, while Lafarge sells for N3,400 – about double of what Zambians pay for the same commodity.

This post was written by Obiajulu Joel Nwolu.

The views expressed here belong to the author and do not necessarily reflect our views and opinions.

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