The price of cement in Nigeria reached NGN10,000/bag (US$6.46/bag) at the start of 2025. Despite an agreement in January 2024 between the federal government and cement producers to lower prices based on ex-factory rates, they remain elevated. This has seen Adesegun Banjoko, president of the National Association of Blockmoulders of Nigeria, arguing that the government should be making deliberate incentives to serve the country’s ever-growing population with cheaper cement by encouraging the construction of further new cement capacity.
Mr Banjoko is adamant that the high cost of domestic cement has negative implications for the construction industries at its current retail price. He believes the three leading cement producers – Dangote Cement, BUA Cement and Holcim associate, Huaxin Cement – are unable to meet the demands of both private and public construction. He further suggests there should be a short-term importation of quality cement to enable the laws of supply and demand to determine more favourable prices as well as sales, terms and market conditions.
“If the government finds it expedient to build good roads with cement instead of bitumen, then the same government should encourage more manufacturers of cement to spring up in the economy with deliberate incentives to serve our ever-increasing population, presently in excess of 200m and its neighbouring countries,” explained Banjoko.
Low cement capacity utilisation
But it is not a lack of installed capacity that is holding the industry back. Nigeria is Africa's largest cement producing country. The Global Cement Report – 15th Edition estimated that production would surmount 33.8Mt in 2024, while capacity reached 65.6Mta. The issue is the low capacity utilisation level of the country's cement plants, which stands at around 50 per cent, as well as challenges such as access to reliable power and the need for lower production costs.
Production capacity is well catered for with various expansion and new capacity projects recently completed or under way. BUA Cement increased its cement production capacity with the opening of the Sokoto Line 5 in the 1Q24. Moreover, Dangote Cement’s 3Mta Obajana expansion and 6Mta greenfield cement plant in Itori, which are expected to come on-stream in 2025, will take group domestic cement capacity up to 41.25Mta.
The Nigerian cement industry is in a state of flux. At the end of 2024 Huaxin Cement took over Lafarge Africa in a US$1bn deal. Lafarge Africa has a significant production base of three plants and 10.5Mta of cement capacity in Nigeria. Whether Huaxin Cement decides to add further cement capacity is not certain yet, but the Ewekoro and Ashaka plants are in the process of debottlenecking to increase their cement capacity.
Furthermore, the IBETO Group plans for 5.2Mta capacity to come on-stream, while BUA Cement’s greenfield 3Mta Guyok plant and new entrants Mangal Industries' 3Mta plant and Resident Cement Co’s 10Mta Gwana plant are further set to inflate Nigeria's cement production capacity.
Getting the new and existing plants to operate more efficiently at around 70 per cent capacity utilisation would satisfy the industry, but while capacity additions continue at the current pace, that will be some way off.