Why we stopped selling cement at N3,500 per bag – BUA

AbdulSamad Rabiu, the Chairman of BUA Cement, revealed that his company’s attempt to sell cement at N3,500 per bag in 2023 was undermined by the actions of cement dealers.

Rabiu explained that BUA Cement had sold over a million tons of cement to dealers at N3,500 per bag, with the expectation that these prices would be passed on to end-users. However, speaking in Abuja, Rabiu noted that dealers were instead selling each bag of cement to consumers for prices ranging from N7,000 to N8,000.

Due to this, the company was forced to discontinue the policy, as it was never intended to provide financial gains to the dealers.

Rabiu highlighted that BUA Cement was unable to regulate the dealers, who were profiting from the high margins because the company had no control over pricing in the open market.

“A lot of the dealers took advantage of that policy,” Rabiu said. “Rather than pass the low prices to the customers, they were selling at even double the price we sold to them. Some were selling at N7,000 and N8,000 per bag, making substantial profits with very high margins. We had sold more than a million tons at N3,500 before we realized what the dealers were doing.”

He further explained that the company could not sustain the low pricing policy due to the economic challenges Nigeria faced at the time, including the devaluation of the naira and the removal of the fuel subsidy.

“We wanted that price to stay at that level, but dealers refused. So, we could not sustain that, simply because we did not want to be in a situation where we are subsidizing dealers,” Rabiu added. “When the foreign exchange rate moved from about N600 to maybe N1,800 to the US dollar, it became even more challenging for us to actually sustain that price policy.”