In recent weeks, the Member of Parliament for New Juaben South and Ranking Member on the Trade and Industry Committee, Hon. Michael Okyere Baafi, has taken to the airwaves with a familiar lamentation. He has publicly criticized the current administration for easing cement import restrictions and reopening previously sanctioned factories. To hear him tell it, the previous regime’s tight grip on the sector was a golden era of “protecting the local industry.” But a closer look at the data reveals a starkly different story. What was framed as protection was actually a highly interventionist, anti-market regime that failed to address the core economic problems faced by manufacturers.
The interventionist squeeze and the defence of manufacturers
The previous administration’s version of “protection” was heavily defined by price-fixing and micromanagement. The peak of these interventions came with the introduction of Legislative Instruments like L.I. 2491, which mandated monthly price declarations and required manufacturers to submit cost breakdowns to the Ghana Standards Authority (GSA).
Manufacturers vigorously defended themselves against these directives by laying bare the true factors affecting their pricing. According to industry cost structures, a staggering 77% of a cement plant’s expenses are directly linked to hard currency (imported clinker, gypsum, shipping, and port charges). The remaining 23% are locally sourced but heavily driven by national inflation and energy costs.
Despite operating in an environment where the Cedi suffered a 104% depreciation against the dollar over a two-year crisis period, the industry didn’t pass all the costs to consumers. Retail prices rose by only 48% over that same period, meaning the price of cement in actual USD terms had dropped by 27%. Local producers were absorbing massive financial hits and operating at a comparative loss against the inflation and depreciation rates, while the state pursued heavy-handed anti-market regulations to look good in the eyes of the public.
Increased supply is not the magic wand
Fast forward to the current landscape, the policy direction has pivoted toward liberalization. However, shifting from an interventionist state to a purely supply-focused model carries its own set of flaws. Supporters of the current regime argue that lifting import bans and reopening factories will automatically drive prices down because of the increased supply. Yet, basic economics in the manufacturing sector dictates otherwise. Adding more volume to a market that already has an excess supply of 1.4 million tonnes does nothing to reduce the core cost of manufacturing a bag of cement.
If structural bottlenecks like massive port inefficiencies and vessel delays in offloading clinker are left unaddressed, macroeconomic stability alone won’t reduce prices any further. You cannot achieve lower retail prices merely by increasing volume if the base cost of every unit remains artificially high due to operational gridlocks.
The case for a total repeal of interventionist laws
While the current administration has taken a more hands-off approach and effectively de-prioritized strict price controls, the legislative ghosts of the past still haunt the sector. Laws like L.I. 2491 are currently loosely enforced, but they remain active.
There is an urgent need to completely review and repeal these interventionist laws. Retaining them serves no purpose other than forcing manufacturers to undergo the needless administrative hurdle of monthly filing for price validation by the GSA. Total repeal will remove bureaucratic friction, allowing businesses to operate freely without the constant overhang of arbitrary state interference.
A new vision for the state
As much as possible, the prices of commodities like cement must be competitively decided by the unforgiving but fair forces of demand and supply. The government should not be in the business of fixing prices or aggressively capping market entry to protect specific monopolies. Instead, any government intervention should be geared purely towards ensuring the efficiency of business operations, ensuring strict technical compliance, and guaranteeing a fair market playing field. Only then will the true “magic wand” of lower input costs finally be waved, yielding sustainable relief for the average Ghanaian builder.
