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Why are we still short of cement?
2008-02-25 08:14:50
By Editor
Our economy has been reeling under the massive weight of acute shortages of cement since the second quarter of last year.
The scarcity has never been satisfactorily explained from the time it began to bite by touching off maddeningly high price hikes, the pinch felt in the entire domestic market and beyond.
A 50-kg bag once used to sell at around 10,000/- but, depending on how much is involved in transport costs, the same now goes for at least 18,000/-.
The situation gradually threatening to get out of hand, the government intervened last year by issuing permits to 15 local companies for the importation of the product from elsewhere within East Africa.
But for reasons yet to be given, those firms failed to deliver - forcing the government to revoke the permits and have them issued to another six firms that are now soon expected to import 150,000 tonnes.
As all of us eagerly wait to see if things will go to plan this time, the national economy continues to suffer immeasurably from the scarcity of the all-important item with the cost-push inflation wreaking real havoc.
The crisis has all but cruised to emergency levels and it would be of benefit to each one of us to want to know how the distribution of locally produced and imported cement is regulated and for whose good.
Annual national cement demand is said to be roughly 1.6 million tonnes, while the combined output of the three factories in Dar es Salaam, Mbeya and Tanga is 1.7 million tonnes.
This would ordinarily mean that the 100,000-tonne surplus is exported because even this window of cement trading is supposed to be regulated.
Tanzania`s domestic cement industry is vigorously protected, thanks to the imposition of a 45 per cent excise duty on top of Value Added Tax.
Domestic production capacity thus finely matches national demand and could safely cushion a booming construction industry.
So, why this mess we are seeing? Could it be true that some of our cement is mysteriously finding its way to South Africa for major pre-FIFA World Cup 2010 construction work?
Is the reported boom in construction work in neighbouring eastern DR Congo really also a factor?
With globalisation what it is, this kind of entrepreneurship is not necessarily illegal business and the government has demonstrated commendable economic proficiency by waiving 25 per cent excise tax on the six firms allowed to import cement.
However, an even better solution lies in having a cement trade policy enabling us to determine the annual growth rate of the local construction industry more scientifically relative to the amount of cement we can produce.
We would also have to consider contingency supplies to cater for unforeseen adverse market shakes the likes of which we are now experiencing, offsetting deficits through imports even when there is no shortage.
That would give our people greater hope of getting modern shelter while allowing major construction industry players greater room to plan.
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