In a recent surge, cement prices in Nigeria have skyrocketed to N7,000 per bag, a substantial increase from N5,000 in December 2023. The rise, attributed to the Cement Manufacturers Association of Nigeria (CMAN) increasing prices by over N1,000 per bag, has varied impacts across regions.
Regional Disparities in Cement Prices
- Retail prices in Lagos and the Southwest region surged to N6,200 or more.
- In Southeast and Abuja, prices soared to N6,500 or higher.
Ripple Effects on Construction Materials
- Sandcrete block prices elevated from N450 to N500 for a six inches block and N550 to N600 for a nine-inch block.
- Ready-mix concrete costs also rose, signaling potential repercussions for construction projects.
Dominant Players in the Cement Industry
- Dangote Cement Plc leads with a commanding 60.6% market share, holding an installed capacity of 29.3 million MT.
- Lafarge Africa Plc follows with a 21.8% share and a production capacity of 10.5 million MT.
- BUA Group accounts for 17.6% of the market share.
Infrastructure Challenges Contributing to Price Surge
- Stakeholders attribute the price hike to infrastructure challenges, including inadequate transportation networks and an unreliable power supply, escalating operational costs.
Projections for 2024
- A report by Cardinal Stone anticipates a rebound in the cement sector in 2024, citing factors such as an increased infrastructure budget of N1.32 trillion, the Infrastructure Support Fund (ISF), and active implementation of the African Continental Free Trade Area (AfCTA).
- However, the report notes that cement prices are expected to remain high in 2024 due to producers seeking to offset operational costs, forex market volatility, and persistent inflation.
Expert Opinions on Macroeconomic Impact
- Mr. Adebayo Adeleke of Lancelot Group emphasizes the critical role of cement in Nigeria’s infrastructure development but notes that local production falls short of demand, resulting in daily price increases.
- Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), highlights the broader macroeconomic challenges affecting various sectors, emphasizing the need to address high inflation, depreciating exchange rates, and energy costs.
Addressing the Crisis
- Yusuf advocates for addressing macroeconomic issues, including better liquidity in the forex market, a stronger naira, and local production of petroleum products to mitigate the challenges posed by the rising costs of construction materials.
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