Building a house now in Nigeria is no child’s play.
You may begin to notice so many abandoned buildings in your area. Do not panic, the price of cement is not smiling.
Manufacturers are feeling the heat, and so are the builders.Â
You see, as the Naira weakens and inflation takes its toll, the story of cement prices in Nigeria has taken a dramatic turn.Â
In just a short time, the cost of producing cement has surged by a staggering 121%, leaving both manufacturers and consumers grappling with the impact.
Hopes for lower prices have faded as producers struggle to manage these increasing expenses.
To make matters worse, smugglers have taken advantage of the higher prices in neighboring countries, making cement even scarcer at home.
In Chad and Cameroon, the price of a 50kg bag of cement ranges from $120 to $150.
For Nigerians, this means a shocking difference when you consider the exchange rate of ₦1,600 per dollar.
That same bag would cost between ₦240,000 and ₦270,200 in neighboring countries, much higher than the ₦8,000 price in Nigeria.
Kabiru Rabiu, Group Executive Director of BUA Cement, has witnessed the growing pressure from illegal smuggling firsthand.
“One of the pressures that we see is that there is a lot of illegal smuggling of export of cement to Cameroon and Chad,” he shared.
“If you take cement just across the border to some of these markets, it is selling at $150 to $270.
That is why we realise that a lot of our cement is actually going to the North East, particularly to Maiduguri.
Cement Prices Crisis: “Government, Step In And Help.”
Many distributors are taking this cement across borders because it offers high margins.”
Even with a significant revenue increase of 84.5% to ₦1.116 trillion in Q1’24 for leading manufacturers like Dangote Cement, Lafarge Africa, and BUA Cement, the story isn’t entirely positive.
Despite the growth, the challenges still persist.
The 121% spike in production costs to ₦586.6 billion has cast a shadow over profits, leading to a 4.1% decline in combined Profit Before Tax (PBT).
This cost surge isn’t just a problem for the manufacturers; end users, including block moulders and builders, are feeling the impact too.
The National Association of Block Moulders of Nigeria (NABMON) is calling on the government to step in and help.
They’ve urged for a reduction in import duties on cement components, hoping this will attract foreign investment and bring down prices.
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“The price of one bag of cement in Nigeria, currently in the region of ₦8,000 to ₦9,000, is still considered too expensive,” said Mr. Adesegun Banjoko.
He is the National President of NABMON.
Sikiru Ajala Enterprise, a builder in Lagos, echoed these concerns.
“The average price for Dangote Cement is ₦9,000, Lafarge ₦8,500, and BUA ₦8,000, which is still very costly.
This is the major reason why most of us builders are not constructing as many houses as possible.
When you go to the banks for a loan, they ask for 30 to 35 percent interest. How can we cope with this?”
Rising energy costs, expensive input materials, and exchange rate volatility are all major factors driving up prices.
As the Naira weakens, the cost of production increases, leaving consumers to bear the brunt of these challenges.
