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Yaoundé - 26 September 2021 -
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Cement: MINCOMMERCE threatens to close CIMENCAM’s facilities should the company raise prices once again

Cement: MINCOMMERCE threatens to close CIMENCAM’s facilities should the company raise prices once again
  • Comments   -   Wednesday, 30 June 2021 12:35

(Business in Cameroon) - For weeks now, in Cameroon, cement prices have risen from XAF4,600 to 4,800 in some hardware stores. Some of the stores even sell the product at XAF5,000. According to some people, retail prices are rising because wholesalers have increased wholesale prices. This explanation is confirmed in a warning letter sent, on June 29, 2021, by Minister of Commerce (MINCOMMERCE) Luc Magloire Mbarga Atangana (photo) to Benoît Galichet, CEO of CIMENCAM, local subsidiary of LafargeHolcim Maroc Afrique (LHMA). The warning letter, whose certified copies were sent to the Prime Minister’s office and the Presidency of the Republic, clearly states that CIMENCAM had already increased wholesale prices at least once before and is preparing to raise it once again without prior approval from the government.  

Various sources have informed me that you are planning to proceed to an umpteenth unilateral price increase, in defiance of my former warnings and calls for negotiations(…) I would like to hereby inform you that should that measure I consider an opposition and provocation happen to pass, I will be obliged to order your facilities to be closed,” Luc Magloire Mbarga Atangana wrote. After that threat, the official reminded that cement is still one of the products whose prices are subjected to the price approval procedures in Cameroon.

This warning is issued just days after Nigerian business tycoon Aliko Dangote was granted an audience and decorated as “Commander of the Orders of Valour” at the Presidency of the Republic. In 2015, the Nigerian billionaire launched the operations of the Cameroonian subsidiary of his cement group. In 2017, that subsidiary, Dangote Cameroon namely, grabbed the leadership of the Cameroonian cement market from CIMENCAM, ending 48 years of monopolistic control. Some analysts think that the audience granted to Dangote is an express invitation for the billionaire to boost his investments in the country by notably building the second 1.5 million-ton plant announced years ago in Yaoundé, after that established in Douala.

Same old stories, same response?

This friction between LHMA and the Cameroonian government is the second in the space of 12 months. Indeed, on June 5, 2020,  Xavier Saint-Martin Tillet, President and CEO of LHMA, informed Pierre Moukoko Mbonjo, President of CIMENCAM’s board of directors, of his decision to renew the 2-year mandate of Benoît Galichet as CEO of the cement group. However, Cameroon, which owns 43% of shares in CIMENCAM strongly opposed that decision. LHMA Group was notified of the opposition through a letter dated August 6, 2020, and sent by Pierre Moukoko Mbonjo who was conveying the President of the Republic’s instructions.

Sources close to the case claim that the rejection was prompted by unorthodox practices carried out by CIMENCAM management. Those practices include artificially inflating the company’s expenses through raw material imports (clinker notably) and by awarding consulting contracts to the Canadian firm Société Canadienne d’assistance technique (Scat). Through those practices, the management reduced the company’s profits and was, therefore, able to subtly expatriate funds. After several behind-the-scenes negotiations, Cameroon finally approved the renewal of this 2-year contract. During a board meeting held on August 29, 2020, in  Yaoundé, the President of the Republic’s approval was officially announced.

Jean-Pierre Le Boulicault, a former CIMENCAM CEO, was not that lucky. He was simply dismissed in 2008, after repeated cement shortages that curiously started when the Cameroonian government refused to agree to a price increase request formulated by CIMENCAM, which was then the only cement company in the country. The architect of that rejection of price increase was Luc Magloire Mbarga Atangana, who is now issuing a similar warning to Benoît Galichet.

Brice R. Mbodiam

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