In the face of ever-rising cement prices on the local market, the Competition and Fair Trading Commission (CFTC) has launched an investigation to establish the level of competition and consumer protection in the business.
The decision has since raised hopes for players in the construction industry of an end to “market abuse”.
In an interview on Tuesday, CFTC spokesperson Innocent Helema said the decision follows increased complaints from consumers and industry players.
He said: “We have been receiving complaints pertaining to conduct of the various market players in the sector.
“The investigation is critical because it will provide recommendations for appropriate policy and enforcement action to ensure that consumer welfare is protected.”
Helema said the probe is expected to unearth the nature and extent of possible violations of the Competition and Fair Trading Act.
Among others, the commission wants to identify major affiliated firms, mergers and acquisitions, associations, agreements, unilateral and collusive conducts (cartels, including cross-border ones) in the cement sector; gauge the degree of dominance, market shares, positions of market power and monopolies in the cement sector.
The proble will also establish the levels of export and import competition in the industry and its impact on price and availability of the product.
Cement prices started rising in August last year following the shortage of the commodity on the market due to halted production caused by lack of foreign exchange for importation of key raw materials.
At that time, consumers were forced to pay about K19 000 per 50 kilogramme (kg) bag of cement, which was about K7 000 above the recommended average price.
However, following an engagement with the local manufacturers, Ministry of Trade and Industry said government did not expect price of any type of cement to exceed K16 000.
However, prices remained elevated, with consumers now paying an average of K23 000 for a 50 kg bag.
In an interview on Tuesday, Consumers Association of Malawi executive director John Kapito observed that consumers have witnessed serious market abuses that require constant monitoring and inspection.
He said: “The Malawi market lacks fair competition as we only have few dominant players in the sector, which needs huge investments.
“It is difficult from the outside to contribute much about the uncompetitiveness of the market without looking at the volumes and size of investment to make credible contribution.”
On his part, National Construction Industry Council spokesperson Lyford Gideon commended CFTC for the probe, saying cement is one of the major inputs in the construction industry.
“While contractors feel the pain on fixed contracts, it is ultimately property developers who suffer as their budgets become inadequate with the increasing prices,” he said.
A study by Habitat for Humanity Malawi and Centre for Social Concern through the Home Equals Campaign, found that on average, residents allocate 15 to 30 percent of their monthly budget to construction materials.
As such, fluctuations in material costs can severely impact their ability to access construction materials and improve their dwellings with low wage earners waiting a minimum of 23.3 years to build their own house.
Shayona Cement Corporation in Kasungu, Cement Products Limited in Mangochi and Portland Cement Malawi in Blantyre remain the only producers of cement in the country, with most of the key ingridients for the product imported.
