Rwandan construction companies have rallied behind the proposal of scrapping all tax on cement imports into the East African Community (EAC) region.
Nathan Lyod, the Chief Executive Officer of DN International said that the move is advantageous as it reduces the cost of construction.
“A reduction is the cost of construction is passed on to the end user. There will be cheaper houses, something which is crucial considering the current situation,” he said.
“The prevailing global financial crisis has affected all individuals. Therefore it is necessary that we think out of the box,” Lyod added.
Similarly, the CEO of Fair Construction, Johnson Kyanga said that the move is definitely gainful to construction firms. He however, did not divulge into details claiming he was in a meeting.
The comments come at a time when there was a 25 percent tax charge on cement.
However, after the implementation of the EAC Customs Union, the Common External Tariff (CET) for cement dropped from 55 percent in 2005 when it was included in a list of sensitive products.
The proposal by Uganda has however, been opposed by cement makers in Kenya and Tanzania. Eight cement firms from Kenya and Tanzania have been reported requested their governments to oppose the zero-rating of cement imports into a regional bloc, fearing they would harm the domestic industry.
They also requested that the sensitive product status of cement be restored and that governments should invoke additional anti-dumping.
A tax waiver on imported cement has sent ripples among industry players who say it’s creating unfair competition in the market, which if unchecked would lead to the closure of some companies that cannot match the competition.
Most of the cement imported into east Africa comes from China, whose companies are building roads across the region, and Egypt, which has cheaper electricity and transport costs.
Rwanda largely depends on imported cement from within the region and outside since Cimerwa, the country’s sole manufacturer can insufficiently sustain the market.
Cimerwa has an expansion plan to increase its production to over 600,000 tonnes annually six times the current capacity of 100,000 tonnes.