As cement manufacturers in the region continue to protest unfair competition from cheaper imported cement, the East African Business Council (EABC) has said it will commission a study to establish the nature of subsides the commodity should receive.
The study, which also seeks to establish the extent to which imported cement is slowing down the regional cement industry, will kick off in March this year.
“The current imports come in when their prices are so low. We need to establish what is making them so low, the kind of subsidies they are getting back home and how much should we refuse those subsidies being given by their home countries to slowdown our industry,” Faustin Kananura Mbundu, Chairman of the EABC told Business Times in an interview last week.
Imported cement into the East African Community (EAC) is said to be 50 percent to 60 percent cheaper than the one that is locally manufactured, mainly believed to be a result of suspension of a 25 percent import duty.
The suspension of import duties in July 2008 was aimed at increasing cement imports to meet the regional demand.
Annual cement demand for Rwanda, Uganda, Tanzania, Kenya and Burundi is estimated at 6 million tonnes. Mbundu said regional output has increased way above that demand at around 9 million tonnes annually.
“The EAC cement producers are producing more than the current demand. Because they are doing that and there are cheaper imports that are coming from outside, they are facing problems,” Mbundu said.
“If we don’t strategize and think about our industries, we may not know where our priorities are.”
He said the current influx of imported cement that is viewed as dumping could also be a result of the recent global economic downturn that slowed business activity and Investment in exporting countries.
“If those countries realize business activity that is good, they will stop the exports. If our industry has collapsed here and we have a boom then we will fail to get cement,” Mbundu.
Manufacturers in the region through the EABC, which is the umbrella arm of the private sector in the EAC, are demanding for reinstatement of duty on cement imports saying that they are being kicked out of business through unfair competition.
“We want to come up with a study which we will use as one voice for East Africa,” Mbundu says.