Zambia Chambers of Commerce and Industry (ZACCI) president Chabuka Kawesha called for increased private sector participation in the cement industry to raise competition that will effectively reduce prices of the commodity.
Lafarge Zambia Plc last week announced an increase in cement prices at its cement plant in Chilanga to K94 and K98 for Mphamvu and Supaset respectively effective January 3, 2020.
The company first sent text messages to its clients announcing that the increase had been necessitated by the continued strain on operational costs before issuing a press statement.
“Dear Esteemed Customer, we would like to inform you that our cement prices ex-Chilanga Plant have been revised upwards following continued strain on operational costs. The new prices will be K94 for Mphamvu and K98 for Supaset VAT inclusive per bag. The prices will be effective Friday 3rd January, 2020. We thank you for your continued support and business with us,” read the text message seen by Diggers!
And in a press release later, the company stated that the 20 percent increase has been effected to sustain business operations following the increase in the prices of fuel and electricity.
“We would like to inform the public and our esteemed customers that Lafarge Zambia plc has increased the cement price, by an average of 20 % to sustain business operations and provide quality cement. The decision to increase the price was a result of the current increase in the prices of fuel and electricity. Energy is a key expense for the company, in both production and distribution of our products. This increase in fuel and electricity will lead to a 98% increase in the company’s electricity and fuel costs. These two costs form a very significant portion of Lafarge’s overall production cost, hence the increase in prices,” stated Lafarge.
“In addition, Lafarge Zambia has been working closely with the country’s power utility, Zesco, on load management. With increased load management, the company has not been able to produce at full capacity, with the implication being that Lafarge has to cover fixed costs with a lower volume level. The company has had a loss in efficiency resulting in an increase in cost of production. Lafarge Zambia has been operating in Zambia for 70 years now with a wide footprint of projects and distribution outlets. Lafarge employs more than 900 people both directly and indirectly and about 8,000 families benefit from activities related to the business. As the country’s leader in building materials and solutions, we remain committed to providing quality building materials at affordable prices to all Zambians.”
However, Kawesha said the cement industry in the country needs more participants.
“It’s cardinal, you know, where factors of supply and demand are concerned that as the private sector, we begin to participate in the expansion of players in the sector so that once there are more players in the sector and with the current players in the sector, we are able to offer market prices that are affordable, not only for the contractors, but for all developers that are undertaking any form of construction because it’s through multiple players in a particular sector and a competitive environment can we see the level of competition that can help [bring down] the prices,” said Kawesha. “There are many factors that determine the shelf price of the product so I think with increased private sector participation, increased players in the market, sustained and continued support from government for a competitive environment in the construction sector, we should be able to establish affordable prices for cement within our market.”