Zambia: 'High cement prices will affect construction sector growth'

Cement traders in Eastern Province have accused Lafarge Cement Zambia of creating artificial shortages by preferring the international market. Meanwhile, local contractors in Lusaka have warned that the recent increments in cement prices could slow growth in the construction sector.

However, Eugene Chungu, Lafarge spokesperson, said the recent increase in cement demand and prices, which had been caused by panic buying after the Lusaka plant shutdown three months ago, should ease following the resumption of production.

Traders in Eastern Province urged Lafarge to ensure that it stocks the local market with adequate supply before thinking of the international market.

One of the cement traders, John Moyo said: "What is happening is that you will find that some places like the second-class trading or Down Shops in Chipata will run out of cement but we see some tracks taking cement to Malawi every day. I feel Lafarge can supply us first before thinking of the international market. Most of us buy cement from the second-class trading area for resale," Moyo said.

He said when the second-class trading area runs out of cement, the local traders always hike the price.

A check at Kapata market yesterday revealed that a bag of cement is selling at KMW75 (US$13.85) from KMW70 (US$12.92). In other districts, a bag of cement is going at between KMW80 and KMW85.

In Lusaka, the situation was similar with prices that were recently as low as KMW55 now skyrocketing to KMW80. Diamond Palace Construction operations director, Ndanji Mutambo, said the increase in prices would negatively affect the construction sector if left unchecked.

Chungu said that the price and the demand for cement would ease in the medium term. He added that the 21-day shutdown recently had caused panic buying and consequently put pressure on the cement firm to meet the artificial demand.

"But the shutdown ended and for the past three weeks we have been ramping up production," Chungu said. "We are producing at maximum capacity so there is more cement going into the market and prices should ease soon.

"It wouldn't make any sense to starve the domestic market and take the cement into the export market when prices are better here. We have just been trying to offset the backlog that was created during that period we shut down," said Chungu.