The galloping enhance within the worth of cement within the nation is understandably elevating issues for stakeholders within the constructing trade. This doesn’t come as a shock, contemplating the nation’s dearth of important infrastructure, together with housing and satisfactory roads. The present scenario actually aggravates the huge deficit in first rate and reasonably priced housing in lots of components of the nation, particularly the city areas.
Stories throughout the nation point out {that a} 50kg bag of cement has currently climbed above the N10,000 mark. It’s disheartening to potential householders. It’s equally regressive to governments’ plans to construct homes and roads utilizing cement as a substitute of bitumen. Certainly, the place of cement in these endeavours is important.
Prior to now, cement producers have achieved excellent monetary efficiency pushed by worth. Home cement costs have remained excessive, ranging between N9,500 and N9,700 per 50 kg bag, up from a median of about N5,500 a yr in the past. The present enhance is inflicting important pressure on budgets, disrupting undertaking timelines, and elevating severe security issues. This instability has pressured many tasks to a standstill and left contractors below strain to search out methods to chop prices, which might compromise constructing high quality.
Constructed surroundings professionals are blaming the present scenario within the housing trade for the rising choice for concrete in highway development and the transition from asphalt to concrete by the Federal Ministry of Works, which is close to monopoly by producers of constructing supplies. There are additionally fears that the excessive value of cement will encourage substandard blocks and a discount within the high quality of concrete by some builders and contractors.
Nigeria has been on the forefront of making certain self-sufficiency concerning native cement manufacturing since 1954, establishing the Nigerian Cement Firm Plc (NigerCem), owned by the Federal Authorities and 5 South-Jap states. Nevertheless, different crops emerged after independence, akin to Ashaka Cement Restricted, Benue Cement Firm Plc, and the Cement Firm of Northern Nigeria Plc.
Nigeria possesses the biggest cement trade in West Africa, and a lot of the outdated crops have been reworked and given a new lease of life. Three main gamers have piloted the cement market – Dangote Cement Plc, BUA Cement Plc, and Lafarge Africa Plc. The trade contributes instantly and not directly in the direction of the expansion of the nation’s economic system, driving fashionable civilisation by offering one of many important assets utilized in development.
Based on the Nationwide Bureau of Statistics (NBS), Dangote Cement, BUA Cement, and Lafarge Africa management over 95 per cent of Nigeria’s cement manufacturing capability. As an example, Dangote Cement built-in crops situated in Obajana, Ibese and Gboko have put in capability of 32.3 million tonnes every year (mtpa), whereas BUA has capability of 11mtpa (Obu plant, 6mtpa and Kalambaina plant, 5 mtpa) and Lafarge Africa has essentially the most expansive footprint in Nigeria with cement operations within the South West (Ewekoro and Sagamu in Ogun State), North East (Ashaka, in Gombe State), and South East (Mfamosing, Cross Rivers State) with manufacturing capability of 10.5mtpa.
The trade additionally acts as an enabler for different sectors, akin to actual property, development and strong minerals. Moreover, by constructing, renovating, and rehabilitating roads, bridges, and different public infrastructure, native cement producers play a major function within the nation’s financial improvement and enhancing social welfare, resulting in beneficial authorities insurance policies and assist.
The trade majors had a mixed manufacturing capability of 62.8 MMTPA unfold throughout 5 of the nation’s six geopolitical zones: the North Central, the South-South, the South West, the North West, and the North East areas. Based on Augusto and Firm, in 2023, the availability of cement within the trade, represented by gross sales of the trade majors, declined by 5.2 per cent year-on-year to twenty-eight MMT because of the slowdown in demand throughout the overview interval. Dangote Cement Plc accounted for the majority (58.5 per cent) of complete provide in 2023, pushed by its appreciable put in manufacturing capability to its friends and the sturdy client choice.
BUA Cement Plc (23.6 per cent) and Lafarge Africa Plc (17.9 per cent) additionally accounted for important shares of the Trade’s provide. In 2023, the trade’s provide represented 49.3 per cent of the put in cement manufacturing capability, decrease than 51.9 per cent recorded within the prior yr.
The three producers reported a mixed N3.623 trillion of their gross sales income within the third quarter (Q3) ended September 30, 2024. The quantity represents a 69.3 per cent enhance from N2.140 trillion mixed income reported by the businesses in the identical interval of 2023. The three high cement producers recorded a rise in gross sales income regardless of the financial headwinds within the nation, which disrupted the enterprise surroundings, starting from the overseas trade disaster, rising vitality costs, and wilted disposable revenue of residents, amongst others.
The monetary affect of those disruptions extends past builders and contractors. The development trade contributes considerably to Nigeria’s economic system, using hundreds of thousands and accounting for 3.5 per cent of the nation’s Gross Home Product (GDP) as of 2023. As tasks are delayed or deserted, the lack of financial exercise impacts the job market and the broader economic system, amplifying the consequences of worth instability within the cement market.
With the lingering excessive costs of cement, there may be a necessity for the federal government to assist domestically sourced supplies that would develop into viable, reasonably priced alternate options to cement, which can present aid to the market and create jobs in materials manufacturing. The federal government also needs to entice extra native and overseas participation within the constructing supplies trade, present incentives, and allow the personal sector to encourage a fast circulate of funds into constructing supplies manufacturing by way of tax aid, accelerated depreciation, and beneficiant capital allowances.
Additionally, the federal government, by way of the varied ministries, departments and companies, ought to hasten the event of applicable capacities to attain sufficiency within the manufacturing of primary constructing supplies and parts of acceptable high quality from native assets with a view to stimulating efficient financial development and improvement; in addition to present matching grants for investments into analysis in the usage of native supplies for constructing supplies producers.
The Constructing Supplies Producers Affiliation of Nigeria (BUMPAN), which is anticipated to put a strong basis for the event of strong, efficient and economically viable small and medium-scale industries for the manufacturing of constructing supplies, needs to be resuscitated, whereas the Nigerian Constructing and Street Analysis Institute (NBRRI) needs to be restructured and adequately funded.
