Africa’s Top Cement Maker Boosts Capacity to Meet Demand Surge

Dangote Cement Plc, Africa’s biggest producer of the building material, will ramp up capacity by more than a third to meet Nigeria’s burgeoning demand as the economy recovers.

“We are expanding capacity from about 50,000 tons a day at the beginning of the year to 70,000 tons a day at the end of the year,” Edwin Devakumar, group executive director at Dangote Industries Ltd., said by phone.

The cement manufacturer, owned by Africa’s richest man Aliko Dangote, is reactivating idle capacity at its Gboko plant, in Benue state, because of a 40% increase in demand in Africa’s largest economy, in the past seven months, Devakumar said.

The International Monetary Fund recently increased its projection for the country’s 2021 economic growth to 2.5% from 1.5%. That would be the fastest expansion since 2015.

Price Fixing

Nigerian lawmakers earlier this week urged the government to break the dominance of the country’s three biggest cement makers to encourage more competition and make the market less “susceptible to price-fixing practices.” That may reduce the cost of cement that’s more than three times higher in Nigeria than the global average, a lawmaker said.

Devakumar said there’s no price-fixing in the Nigerian market. “All other producers in the market can sell at their own price,” he said.

Prices have risen because of increased demand, the higher cost of diesel and instability in gas supply used to power manufacturing plants, Devakumar said.

In addition, “transport fares for moving cement have jumped up, due to congestion at the ports that has resulted in longer turnaround time for trucks,” he said.

In 2020 Dangote Cement sales volumes in Nigeria grew 12.9% to 15.9 million tons compared with the previous year. The company has a 61% share of the market, Lafarge Africa Plc 22% and BUA Group the remainder.

Dangote has a large share of the market in Africa’s most-populous country because it has invested in the sector, Devakumar said.

“Our crime is having confidence in the economy and investing to expand our capacity,” he said.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.