FrontPageAfrica.com - All Things Africa

HOME
	Politics
	Business
	Health
	Multimedia
	Sports
	Obituaries
	General News
	Writer's Lounge

Comments
	Editorials
	Letters
	Interviews
	Commentaries
	Columnists

SPECIALS
	CABINET BIN
	INAUGURATION
	ELECTIONS'05
	NEWSBUNDLE
	FPA GREETINGS
	FPA IMAGES
	RANDOM THOUGHTS

Email this to a friend

News Detail

Cemenco Monopoly is Headache for Liberians: Many want to build, but can’t afford the price of cement - 12/27/2005 9:59:30 PM

Rodney D. Sieh, Sidiki Trawally

rsieh@FrontPageAfrica.com, strawally@FrontPageAfrica.com

Like every Liberian in the Diaspora, Emmanuel Barcoleh of Reston, Virginia is dreaming of returning home to his beloved Liberia and building a home for him and his family. “Everyone wants to build in Liberia, but they cannot build with the high cost of living and the high cost of building materials including cement,” says Barcoleh.

With the civil war on the verge of an end, scores of Liberians, like Barcoleh are hoping that with the ushering in of a new government peace will continue, and they would soon be able to return home and build homes.Some have already begun that process but are finding it extremely difficult to cut the cost, especially for the price of cement.

Part of the reason is that Cemenco has had a monopoly on the sale of cement in Liberia since 1977. Cemenco is the international subsidiary of the Scancem AB which owns 62 percent of the stocks in the company compared to 29 percent for the government. The remaining 9 percent is owned by local stockholders. The factory runs two cement mills and a plant with a production capacity of 220,000 metric tons of cement a year. Cemenco has a monopoly on the sale of cement in Liberia, and sells the cement for about US$7 a bag.

“When the law was passed, the True Whig Party (TWP) had a block of shares in Cemenco and that’s how they gave the company that kind of monopoly in Liberia,” says veteran Liberian lawyer Varney Sherman in an exclusive interview with FrontPageAfrica. Now some including Sherman believes it is time to revisit that contract agreement.

Sherman: Law needs to be repealed

According to Sherman, monopoly is illegal and that particular law ought to be changed. Sherman believes that “when there is competition, not only you get better products, but you also get better prices. We need to have competition in everything we do in Liberia. I would not support monopoly.”

“I want to be able to import cement in Liberia. I want to join other Liberians to import cement into Liberia. I honestly believe that we can import cement into Liberia and sell it cheaper,” Sherman says.

During the general elections, his Liberian Action Party led coalition dubbed Coalition for the Transformation of Liberia (COTOL) won a sizeable number of seats in both houses of the next Congress. COTOL leads with 23 percent of the seats in the Senate and 13 percent of the House, a formidable third place.

Sherman has vowed to use that power in Congress to push for the law giving Cemenco the monopoly rights, to be revised. “Although it was not this particular legislature, it was the Tubman administration that passed that law and we are going to lay this in front of the legislators and tell them to raise it so that they can repeal it.” This law is a provision of the new business law and the only branch of government to repeal it is the legislature. Even the executive, all they can do is to recommend it for repeal to the legislature.”

Nagbe Sloh of Pennsylvania, Philadelphia differs with Sherman on the repeal of the Cemenco Contract. “I think to repeal any law must not be selective. I know monopolies are economic killers and there should be no monopoly. I think Varney Sherman wants Cemenco contracts repealed because Cemenco does not want to hire him as their lawyer.” “Cemenco has had the monopoly since Tubman time and I also believe that free market economies prosper faster and benefit the majority than monopolies.”

John S. Morlu II says that he did not think that Sherman meant that all monopolies are illegal. Morlu maintained, "If the Cemenco monopoly was illegal, then why is it that Sherman wants to go to the law makers to have it repealed? How can one repeal something that is illegal?" Morlu says further that, “It is one thing to argue that the monopoly rights given to Cemenco is bad for Liberia and its suffering people, and ought to be repealed. But it is false to say it is illegal because the TWP regime went the extra mile to pass a law giving the monopoly rights to Cemenco.”

FrontPageAfrica learned that in giving these companies monopoly rights, the government reasons that it is only economically efficient for one company to run such a business in a given locality; there are economies of scale to be achieved. But Morlu says, “I do not know whether there are any economies of scale to be achieved in the Cemenco case.” He asked rhetorically, “What economies of scale are in one company producing cement. The problem in Liberia boils down to simple demand and supply and I will bet that Cemenco is not capable of producing to full capacity at this point.”

FrontPageAfrica informs Morlu that in America, government, both local and state create artificial monopolies all the time. But Morlu says, “These monopolies rights are usually given to utility companies such as electricity, water and gas. Today, we even have localized monopolies of cable companies and highway construction, for example Toll Roads. The fact of the matter is that it would not be safe or economical for you to have multiple companies laying electricity wires in one locality. They would soon run into one another and create a potential hazardous situation. Nor is it a smart thing to have two separate business entities making roads side by side heading in the same direction.”

One caveat Morlu pointed out is that in such an instance where one company is given monopoly rights because it is believed that it would not be inefficient to have two or more companies, “there is some kind of price control that limits how much the monopolized company can charge consumers and hence limiting the profit it can make. That is why they are usually called regulated monopolies.” Morlu concludes with a suggestion to Sherman, “Sherman is on to something that we should all embrace. But instead of going after Cemenco, he should approach the matter holistically by reviewing all the government created monopolies and repeal them on the basis of lack of economic substance rather than doing it piece meal. Targeting Cemenco alone would leave the impression that he wants something out of it. And while he is at it, the legislators ought to consider the environmental mess that will be created by having every Tom, Dick and Harry producing cement.”

‘Price of materials too high’

“Only five percent can afford the means and the thing will even get worse for the poor. We in the United States are feeling the heat. It takes us very long time to complete building,” says Barcoleh. “Right now I am putting up three bedrooms in Paynesville, but you know how long it has taken me to get it to roof level? Four years, all because the cost of cement at US$10 and more is killing me. Besides, other materials are also high," Barcoleh concludes.

With a production capacity of 220,000 metric tons of cement a year, operations were severely affected by the civil war that broke out in the country in 1990. But in spite of the chaotic conditions in Liberia in the years before the election, Cemenco was able to maintain a certain level of production during most of the war years.But that has changed with the return to normalcy on the horizon.

The price of cement is a burden for many. Talahata Sheriff of Bristol, PA says it’s pretty tough today to build in Monrovia. “The price of Cement is astronomical; to get sand from the beach is also costly. The price of Blocks is huge compare to what it was before I left Liberia five years ago. Nails, Zincs, ceiling tiles, doors, and windows are very expensive today back home. It depends on how much money one has in order to complete a building project faster.”

Moses Sandy of Claymont, Delaware thinks that Liberia needs an open market system for competition. “Let the prices be determined by demand and I am sure things will stabilize with an open market system. I am involved in building my house, but right now I have very little information, but I know some people are selling cement for $10.00. It’s really tough, but it also depends on the honesty of your family members, who are handling the project. Cost of materials is also another problem. Cement, I am told, is difficult to obtain on the market a lot of time,” he says.

Slave wages allegations

According to the watchdog group, Norwatch, workers at Cemenco too have been complaining about the hardship and issues of slave wages which have emerged over the years. ‘The shooting in this country has stopped, but not the fight to survive,” workers told NorWatch. Norwatch reports that "after talking to most of the 23 workers on the factory floor in Cemenco, and visiting five of them at home," the group says it "left with the impression of very desperate employees: For fear of losing their jobs, the workers did not want their names to be mentioned. Nevertheless, they strongly criticized the conditions at the Scancem factory."

Workers quoted by Norwatch, says Cemenco pays slave wages. “A small clique controls an empire, while we have to perform much hard work for a pittance," they told NorWatch. "One after the other they showed us their pay slips documenting that their gross wages are between 1,200 and 1,500 Liberian dollars a month (about 175 - 245 Norwegian kroner). At the same time these pay slips show that taxes, union dues and repayment of loans from Cemenco considerably reduce the monthly pay."

A 50-kilo bag of rice costs around 245 kroner, more than most of the workers make a month, the workers say in despair. In addition to the ordinary pay, the workers have received an emergency extra pay of 2,650 Liberian dollars a month due to the war situation. The amount is supposed to cover, among other things, medical care and transportation. But how long the workers will keep this extra pay is uncertain.