By Mihe Gaomab II
WHALE Rock Cement, the second cement producing company in Namibia after Ohorongo Cement, expects to fully commission its plant at the end of October
Cement is a critical ingredient in the manufacturing of concrete and other products.
Cement represents a basic ingredient towards infrastructure construction which is essential for growing virtually all the sectors thus aiding to higher levels of economic growth.
It represents a basic social stratum in terms of housing needs and sanitation.
Cement is essential for the establishment of transport corridors, gateways, airports, seaports and networks needed for regional integration and customs facilitation.
A good infrastructure network facilitates intra (within) and inter (between) trade amongst countries which in turn can represent the springboard for growth and development within SADC and SACU region for example.
Cement in effect works like glue, locking together the sand and gravel as ingredients towards a hard solid object.
The main inputs in the manufacture of cement are limestone and shale, which are blended in specific proportions and fired at high temperatures to form cement residue.
A small quantity of gypsum is then added to the residue, which is then ground to a fine powder known as cement.
Therefore cement is an important input in the building of infrastructure, such as roads, bridges, harbours, housing etc.
Given the fact that cement then represents a basic tenet of substantial infrastructure investment and having its broad impact on the economy, it is important that cement is made available on a broader choice of cement products basis and with fair competitive pricing.
This can only be done if there is a fair and just competition in the cement market.
There is however regard to the evolving competitive situation of cement in the Namibian market. There are numerous importers and significant producers.
The prices that are evident in the cement market in Namibia should represent both the price affordability and broader choice of cement.
The importers need to guard against selling cement at giveaway prices whilst it is of a questionable standard as this can pose risk to sustained construction infrastructure and low quality formation of buildings, roads, bridges etc.
Cement importers need to guard against being accused of “dumping” of cement and rather be conscious of fair trade and selling quality products.
The producers on the other hand may need to consider its transport cost advantage when pricing their cement product in Namibia. It may be argued that there is room to ensure more affordable pricing of cement which should be beneficial not only for consumer but for the overall social and economic fabric of the country.
After all, cement affordability is almost close to being a right rather than a privilege as it remains a basic ingredient for housing and industrial structure, be it in a form of building or dams, roads or bridges.
There is need for competition for prices of importers to respond from being labelled offering “ridiculous prices,” to the producer being labelled as “unaffordable pricing”.
There is need for safe, just and fair competition on the supply and pricing of cement in Namibia to ensure that consumers benefit in terms of prices that are not only market (i.e. demand and supply) driven but reflects an element of affordability and wider choices of cement for the Namibian consumer.
After all, all Namibians are consumers in one way or the other.
If this does not happen, what normally happens from an economic point of view is that importers rally for predatory pricing and dumping of cement in a market of low standard which poses health risk to consumer, industry and economy.
In order to counter such situations, the producers on the other hand rally for infant industry protection which sometimes is not economically feasible as it simply raises cost of protecting the inefficient supply of cement inside an economy and then such costs are passed on to consumers. However if there is efficient supply of cement this will have desirable effects of reduced pass through effects to consumers.
It is only fair that whilst spirited competition is encouraged in the Namibian market, predation and exclusionary practices in a monopolistically competitive markets be avoided to ensure efficient of supply of cement on an affordable competitive pricing and wider choice of cement products for consumers.
Competition in the Cement Market can only be just and fair on basis of an efficient productive capacity of cement producing industries and accommodating that of importing agencies and it should aim to explore Namibia plus markets in SADC and SACU economies where there is need for supply in those markets.
For Namibia, however this means that importers and producers alike should aim to compete in a good fashion and ensure volume of cement supply on a wider and differentiated basis with a price that is conducive to the cement market and also for the Namibian consumer.
Such an outcome can only be highly desirable for effective market supervision with enforced competition regulation by the Namibian Competition Commission that when properly regulated can only aid in overall infrastructure, economic growth and development for the cement value chain on production and construction and indeed widely for the Namibian economy.
Mihe Gaomab II is the Founding Chief Executive Officer of the Namibian Competition Commission. This article is written in his personal capacity.
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