A new research conducted by IMANI Africa in collaboration with ATLAS network has revealed a shocking paradox in Ghana’s construction sector, where manufacturers are selling cement at prices described as “completely unsustainable” in real terms, while government regulations threaten to create the very shortages and quality crises.
This means the attempted governmental intervention, according to IMANI, if implemented will rather create shortages and the quality concerns it aims to prevent.
According to the analysis published in the research report titled “Promoting Economic Freedom: Addressing the Impact of Government Interventionism on Free Market Principles in Ghana”, the country’s cement market has already shielded consumers from the nation’s severe currency and inflation crisis.
IMANI finds that the market has absorbed massive costs rather than passing them through to consumers. Despite this reality, industry leaders fear the newly enacted price controls will punish this restraint and paralyze the construction industry.
The Secret Cost Crisis Hidden by the Cedi
According to the research findings, the core conflict facing cement manufacturers is a cedi-dollar problem. While they sell their product in cedis, their costs are dictated by foreign exchange rates.
IMANI reveals that “Roughly 77 percent of a cement plant’s variable costs, primarily clinker and gypsum purchases, shipping and port charges, plus imported consumables, are denominated in U.S. dollars”.
Despite the Ghanaian cedi depreciating by 63 percent between June 2022 and June 2024, the retail price of a 50 kg bag of cement, when measured in U.S. dollars, has actually fallen by roughly 27 percent during the same period.
For IMANI, this decoupling reflects a conscious choice by producers to absorb costs to avoid price shocks to builders and contractors.
Ghana’s Cement “Cheaper” Than Neighbors’
Compounding the paradox is the fact that Ghana’s cement market is already one of the most fiercely competitive in the world, featuring about 14 independent suppliers. This natural competition has kept prices low without requiring state intervention.
Ghanaian prices currently lag behind regional neighbors, keeping prices “roughly 5 percent below Togo and 10 percent below Benin”.
The Chamber of Cement Manufacturers (COCMAG) argues that because this fierce rivalry already disciplines prices, the government’s move is unnecessary and undermines the principles of a free market.
The Regulatory Hammer
Amid this volatile financial landscape, the government introduced the Ghana Standards Authority (Pricing of Cement) Regulations, 2024 (L.I. 2491) in July 2024.
This legislation mandates that manufacturers submit monthly ex-factory price build-ups detailing raw material costs, labour, utilities, exchange rate impacts, and profit margins to the Cement Manufacturing Development Committee (CMDC) for approval.
Although the Ministry of Trade and Industry insists the regulation is merely a “price reporting and verification mechanism,” stakeholders contend that the requirement for prior approval effectively amounts to price control.
The consequence, experts warn, is severe:
Supply Collapse: Industry groups caution that ill-conceived price interventions could “destabilize supply chains and provoke artificial shortages”. Manufacturers might be forced to cut production, hoard stock, or even exit the market due to the administrative delays and refusal to approve prices that reflect dollar-based inputs.
Safety Risks: Producers warn that price caps risk incentivizing “quality dilution”. Forcing firms to operate below sustainable margins could compel them to increase production of lower-grade cement (32.5R) instead of the higher grade (42.5R), which “undermines structural integrity in construction, with long-term safety implications”.
Ignoring the Root Cause
The most critical insight from the stakeholder analysis is that the government’s regulation entirely misses the true drivers of construction costs.
Stakeholders agree that L.I. 2491 fails to tackle structural issues like foreign exchange volatility, port handling inefficiencies and demurrage charges, and arbitrary statutory fees, such as an unfounded fumigation levy on clinker imports estimated to cost US$3.6 million annually.
It is the belief of IMANI that by focusing regulatory efforts on the final price, the symptom, rather than reforming the dollar-based cost structure and logistical burdens, the new legislation threatens to worsen the situation for consumers and builders.
The think tank fears this could potentially stall infrastructure projects and discourage the investment Ghana needs.
