Cement distributors demand commission on each bag to stay profitable

The National Association of Cement Distributors is asking for a commission of 50 pesewas or one Ghana Cedi from cement producers on each bag of the product to enable them stay in business due to increasing competition in the industry.

The Western Regional Chairman of the Association, Andy Biney, has told Citi Business News the growing competition compels them to pass on their profit margins to retailers.

The distributors’ call was made at the 2019 Ghacem Customer Appreciation night in Takoradi, where Ghacem also declared 2020 as a year of action to support government’s year of roads agenda.

Since the liberalization of Ghana’s cement industry in the early part of the year 2000, the cement industry has become competitive. Ghana Cement, which today has lost its monopoly by some 55 percent to Western Diamond Cement, Dangote and other importers, is feeling the heat of competition as Ghacem could only sell a little over two million tonnes of cement in the whole of 2019.

Ghana currently has four main cement brands in the country, comprising GHACEM, Dangote, Diamond Cement and CIMAF Cement. There are also individuals who import other cement brands into the country.

The Managing Director of Ghacem, Stefano Gallini, speaking at the 2019 Ghacem Customer Appreciation night in Takoradi where 66 distributors, where direct customers and sales persons were awarded, said their plight was even worsened last year when government failed to spend the budgeted 8.5 billion Ghana Cedis on infrastructure development.

Though Ghacem is targeting to produce two-point-nine million tonnes of cement by close of this year to support government’s year of roads agenda by making cement available nationwide, their distributors who are key to this agenda say they are struggling with competition, hence the need for the commission on each bag of cement.

“We’re asking that they give us commission on every bag of cement we sell because before then, we were putting a margin on it as profit, but because of competition nowadays, we usually pass on our margins to the retailers and virtually the distributor doesn’t get anything. So we are pleading with them to give us a margin of 50 pesewas to one cedi as commission, so that we will be able to work and get something out of it”.

In response to the distributors demand, both the General Manager and Commercial Manager of Ghacem told Citi Business News the concerns would be looked at.

General Manager and Commercial Manager of Ghacem.

“We’re GHACEM because of our distributors; we’ve been number one for all these years because of our distributors, so we will look at the proposal although there are some incentive packages in place. We will listen; and I believe that we will work out something for their needs to be met.”

In all, Clement Effah of Clemonic Company Limited was adjudged the overall best distributor for Ghacem in 2019.

source citibusinessnews