The retail price of cement has risen from N5,000 in December, 2023 to between N6,500 and N7,000 per bag as at February 9, 2024, depending on the location in the country.
Investigations revealed that operators under the Cement Manufacturers Association of Nigeria (CMAN) have raised prices of brands by over N1,000 per bag. This has increased retail prices from N5, 000 to N6, 200 or more in Lagos and Southwest region. In Southeast and Abuja, prices have shot up to N6, 500 or higher.
The development has already affected prices of sandcrete blocks. Block makers have increased their prices from N450 to N500 for a six inches block, while the price of a nine-inch block rose from N550 to N600 per block. The price of ready-mix concrete has also increased, while the cost of in-situ production of concrete will rise significantly. Such an increment will worsen the economic situation as prices of new homes and rents will rise, including maintenance cost.
The Nigerian cement industry has three major players with Dangote Cement Plc being the leader, wielding 60.6 per cent of the market share with a local installed capacity of 29.3 million MT. Lafarge Africa Plc has 21.8 per cent share with a production capacity of 10.5 million MT, while BUA Group accounts for 17.6 per cent share.
Stakeholders attributed the increasement to infrastructure challenges, ranging from inadequate transportation networks to an unreliable power supply, compound operational costs for cement producers.
A report by Cardinal Stone titled, ‘Nigeria Cement Rebounding from a Tumultuous Year’ revealed that cement prices in 2024 will remain high, saying, the year 2023 was challenging for the nation’s cement industry occasioned by the poorly executed naira redesign which led to cash scarcity, currency devaluation in June, and heavy rainfalls during the third quarter (Q3).
However, it projected a rebound in the sector’s performance in 2024 based on the increased infrastructure budget for 2024 at N1.32 trillion, the creation of the Infrastructure Support Fund( ISF) by the Presidency, active implementation of the (AfCTA), increased production capacity, among others.
For pricing, the report noted that cement prices will continue to remain high in 2024 due to producers seeking to offset operational costs, volatility in the forex market, and high inflation.
The group executive chairman of Lancelot Group, Mr. Adebayo Adeleke stated that, the Nigeria’s economy is highly reliant on cement for the development of basic infrastructures such as roads, water supply, hospitals, schools, houses ports, saying that although, the domestics dem for cement in Nigeria been expanding rapidly, local production continued to fall short of the dem hence, price of cement in the cement time been increasing daily.
The chief executive officer of Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf stated that this is a reflection of the general macroeconomic environment, a reflection of the inflationary trend.
He pointed out that, “this inflation phenomenon is cutting across all sectors of the economy. And for those in production, their costs are also going up; costs of inputs are going up, costs of transportation are going up and costs of energy are going up.
“Exchange rate is affecting practically all the sectors. Because like many other manufacturing industries, they also have their own imported components in their production ecosystem.
“And any imported item now, or imported inputs, the costs are going up again. So that is what it is. So that means that the cost of construction will go up, our ability to meet housing needs and bridge the housing deficit will also be negatively affected because of the high cost of cement and other construction materials.”
Yusuf added that, “cost of projects will generally go up, all the construction projects that are in the budget. So, a lot of project costs will have to be reviewed, whether in government or in the private sector.”
On the way out, Yusuf explained that, “is for us to address the macroeconomic issues. Macroeconomic challenges of high inflation, depreciating exchange rate, liquidity in the foreign exchange market, high energy costs, among others need to be addressed.”
He called for better liquidity in the forex market; stronger naira, that is a stronger exchange rate, adding that, “we must ensure a local production of petroleum products, which hopefully may bring down the cost of energy. All of those things could help to mitigate the problem.”
