Cement Prices Are Indeed High, But Profiteering Isn’t the Culprit – IMANI Unpacks Situation

High prices of cement amid favourable macroeconomic conditions have been a subject of concern in recent weeks, causing disaffection among citizens.

As prices of many goods on the market are cooling, though very slowly, prices of cement at many places are not declining, still hovering over GH₵100 per 50kg bag in many places.

While many people, including some government officials, are blaming the producers for cashing in on Ghana’s building boom, policy think tank IMANI Africa has a different perspective.

The public policy think tank believes those pointing accusing fingers at producers, wholesalers, and retailers are shooting at the wrong target.  

In response to recent calls within the government to regulate cement prices, IMANI says the public anger is understandable, but the assumptions are misdirected.

According to the think tank, the rising cost of cement isn’t driven by greed or profiteering but by a complex cocktail of upstream and downstream cost pressures that affect every step from importation to delivery.

“Ghana’s cement prices are high, no doubt, but their inflation is not simply the result of profiteering or arbitrary price-setting by producers,” IMANI said in a policy brief cited by The High Street Journal.

Breaking down what is still keeping the prices of cement over the roof, IMANI explained that clinker, the main ingredient, is imported and priced in dollars. When the cedi wobbles, so does the cost.

Transportation cost, propelled by fuel prices, also plays a major role. Import duties and port charges add a thick layer of cost before the cement even hits Ghanaian soil.

Electricity tariffs, especially for industrial users, have risen sharply, affecting manufacturing costs. The cement industry also suffers from the vagaries fast fast-rising inflation.

“Prices in this sector reflect a mix of upstream and downstream costs: volatile foreign exchange rates, import duties on key inputs like clinker, rising transportation costs, fuel prices, electricity tariffs, and the broader inflationary trends affecting logistics and manufacturing nationwide,” IMANI recounted.

While some are pushing for the government to regulate cement prices “to protect the consumer,” IMANI warns that such a move could have the opposite effect.

Artificial price controls, they argue, would make it harder for producers, especially smaller ones, to break even.

“Any attempt to artificially set prices through regulation without first addressing these structural cost factors is not only economically unsound but also potentially dangerous,” the policy brief indicated.

It added that, “It can lead to distortions in supply, reduced incentives for investment, informal price markups, and even the withdrawal of smaller players from the market, all of which ultimately harm the very consumers such regulation claims to protect.”

IMANI says the solution isn’t in legislating prices, but in addressing the root causes, such as reducing import duties on clinker and other raw materials. Moreover, the appreciation of the cedi must be sustained to reduce currency-related volatility.

The think tank also calls on the government to support competition and reduce barriers for new entrants, while reviewing energy tariffs for industrial producers

For IMANI, cement prices may be sky-high, but they are high not because of greed but because Ghana’s economic terrain is rugged. Fixing the economy will automatically fix cement prices favourably.

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