Rabiu Abdulsamad, the Chairman of BUA Cement, has disclosed how his company’s attempt to offer cement at a reduced price of N3500 per bag to Nigerians in 2023 was thwarted by unscrupulous dealers.
Despite BUA Cement’s desire to make cement more affordable for Nigerians, Rabiu Abdulsamad revealed that dealers were selling the product at inflated prices as high as N8,000 per bag.
Rabiu Abdulsamad shared that BUA Cement had initially sold over a million tons of cement to dealers at the intended price of N3,500 per bag in order to make it more accessible to the public.
However, many dealers took advantage of this by selling the cement at much higher prices, ranging from N7,000 to N8,000 per bag.
Instead of passing on the cost savings to consumers, these dealers capitalized on the opportunity for increased profits.
Rabiu Abdulsamad expressed frustration at the dealers who were benefiting from the situation and acknowledged the challenges BUA Cement faced in trying to oversee and regulate their pricing practices.
He also cited the devaluation of the Naira and the removal of fuel subsidies as additional obstacles that made it difficult to maintain the subsidized price.
In his words:
“So, a lot of the dealers took advantage of that policy. 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 8,000 per bag. They made a lot of money with a very high margin. I think we had sold more than a million tons at N3,500 before we realised what the dealers were doing.
“And then, because of the issues that Nigeria faced at the time about the devaluation of the Naira last year and the removal of fuel subsidy, we could not continue that policy.
“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.
“I’m referring to the point when the foreign exchange rate moved from about N600 to maybe N1,800 to the US Dollar. So, it became even more challenging and more difficult for us to actually sustain that price policy.”
