Low import duty to hit East African cement producers

01 August 2014

Local cement producers are set to bear the brunt of the East African ministers’ decision to retain a lower duty on cement imports.

The decision by the ministers to remove cement from the list of “sensitive products” means partner states would continue paying an import duty of 25% on portland cement and promises low prices for consumers.

“We had hoped the import duty would be increased to at least 35% so that we’re cushioned from the imports,” said Narendra Raval, chairman of Devki Group.

Raval, whose company produces the National Cement brand noted that local cement producers expected to be better promoted before cheap imports are allowed into the market.

The East African Community (EAC) has a sensitive list of products covered by the EAC Customs Union Protocol, which exposed cement to a 55% tariff to be reduced by five percent a year from 2005.

The sensitive status was removed in 2008 following cement shortages occasioned by the construction of stadiums for South Africa’s 2010 World Cup. Import duty was then reduced to 25% from 40% and has remained so.

Local producers say the cement import tariff reduction has made cheap cement from China, India and Pakistan flood the market, with market insiders saying cement from those countries sold at 50% to 60% below the domestic market price.
With one of the main objectives of the EAC being to sustain the expansion and integration of economic activities within the Community, local producers are wondering if the bloc is living up to its objectives.

While the 25% tariff may seem best to the bloc currently, the ministers are expected to address the tariff issue once its overall effect on the market is observed.
By Niyi Aderibigbe
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