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Inside Tanzania’s construction material output vs cost paradox
Roofing sheets being manufactured at a factory. Despite significant growth in the construction materials industry, consumers are yet to feel the impact as prices remain high, leading to increased rental costs across the country. PHOTO | FILE
What you need to know:
- A survey conducted by The Citizen revealed that cement prices have surged over the past three years, rising from as low as Sh12,000 per bag to between Sh14,500 and Sh17,000, with some regions seeing prices exceeding Sh20,000.
Dar es Salaam. Despite significant growth in the construction materials industry, consumers are yet to feel the impact as prices remain high, leading to increased rental costs across the country.
Over the past decade, cement production has more than doubled, increasing from 4.4 million tonnes to 9.1 million tonnes, according to official figures from the Industry and Trade ministry.
However, industry stakeholders cite persistent taxation and other operational challenges that continue to burden manufacturers, limiting the potential for price reductions.
The government acknowledges the complexity of pricing in the construction sector, emphasising that multiple factors influence cost fluctuations.
According to the Industry and Trade ministry, while the current trends are not extreme, ongoing efforts are being made to ensure that industrial growth translates into benefits for end consumers.
In the steel bar industry, the annual domestic demand as of March last year stood at 605,369.6 tonnes. Local production sufficiently meets this demand, with an excess of 294,630.4 tonnes exported to neighbouring countries such as the Democratic Republic of the Congo, Burundi and Rwanda.
Despite this, steel bar prices remain high, with a 12-millimeter bar selling for between Sh22,000 and Sh25,000, depending on the region—although lower than in previous years.
A survey conducted by The Citizen revealed that cement prices have surged over the past three years, rising from as low as Sh12,000 per bag to between Sh14,500 and Sh17,000, with some regions seeing prices exceeding Sh20,000. Steel prices have also increased, with the cost per tonne rising from Sh1.8 million to approximately Sh2.4 million.
Consumers acknowledge a slight decline in cement prices but argue that the reduction does not reflect the increasing number of factories in the country.
Speaking to The Citizen, the Director of Policy and Planning at Industry and Trade ministry, Mr Neepeace Wambuya, attributed the price situation to various external and internal factors, including distribution inefficiencies, geopolitical influences, global economic trends and foreign exchange fluctuations.
“The demand for construction materials remains high due to rapid growth in the sector, which creates supply constraints. However, this demand is also driving increased investment in the industry, which should, over time, improve efficiency and distribution,” he said.
Mr Wambuya added that the government is working to improve the supply chain, enhance price transparency, and ensure better distribution channels to help stabilize prices.
Additionally, efforts are underway to reduce dependency on imported raw materials. The government is finalising agreements with investors for the Liganga iron ore and Mchuchuma coal projects, which will facilitate local steel production and lower costs in the long term.
To improve the business climate, authorities continue to implement the Blueprint Initiative, aimed at reducing barriers to doing business.
Mr Wambuya also noted that the review of the industrial policy is nearing completion to align with global trends and technological advancements.
Industry experts suggest that taxation and outdated technology contribute significantly to the persistent high costs.
Vijay Contractors managing director, Joseph Magida said tax relief on construction materials could ease price pressures.
“The government needs to consider interventions; otherwise, many people will be unable to afford homes. With Sh20 million, you can only build a small house at current prices,” he said.
Mr Magida further pointed out that reliance on imported raw materials, coupled with fluctuations in foreign exchange rates, continues to drive up costs.
Joint Consult Limited managing director Alex Silayo echoed similar sentiments, stressing that high operating costs make it difficult for industries to lower prices despite increased production. He suggested exploring alternative materials to reduce reliance on expensive imports.
On the consumer side, Ms Adeline Tarimo, a resident of Goba, said the rising cost of construction materials is discouraging young people from building homes.
“I started building a three-bedroom house in 2020, but it’s been tough. Steel prices have gone up significantly, especially with the rise in the dollar exchange rate,” she said.
She also noted that rising construction costs are pushing up rental prices as landlords seek faster returns on investment.
“We have many factories, but prices remain high. More needs to be done to bring them down,” Ms Tarimo added.
