Nigeria raps dominance of large cement firms hampering economy

By Camillus Eboh
ABUJA, April 20 (Reuters) - Lawmakers on Tuesday criticised
the dominance of three large firms in Nigeria's cement industry
amid price rises they said impedes construction critical to
economic recovery, calling for looser licensing rules to attract
new entrants.
Nigeria has total cement production capacity of 47.8 million
tonnes and annual demand for around 20.7 million tonnes, but
cement prices are some 240% above the global average, they said,
a serious dampener on Africa's largest economy. A tonne sells
for up to $135 in Nigeria, industry data shows.
Lawmakers have challenged cement price hikes since 2016
given the dominance of Dangote Cement DANGCEM.LG , founded by
Africa's richest man Aliko Dangote, which has 60.6% market
share. Lafarge Africa WAPCO.LG accounts for 21.8% while BUA
Cement BUACEMENT.LG has 17.6%.
In a motion adopted in the upper house Senate, lawmakers
called for a relaxation of licensing restrictions to create the
competition needed to drive down prices.
They warned of the negative impact of high prices on the
Nigerian economy, which emerged from recession in the 2020
fourth quarter but is grappling with double-digit inflation and
a shrinking labour market amid mounting armed violence.
"The recent increase in the price of cement slowed down the
amount of construction work being embarked upon...and almost
collapsed the procurement plan of the government in 2020," the
motion said.
Cement firms raised prices during Nigeria's 2016 recession
to counter low sales volumes, and the country shut land borders
in 2019 for more than a year to curb smuggling, damaging
exports. Firms raised prices to make up for revenue
losses. "If the status quo persists, the negative consequences of
high prices on the economy will outweigh the benefits of
producing cement locally," lawmakers said.
President Muhammadu Buhari has made investment in railways
and roads a focus of his administration's drive to kick-start
growth, but falls in public revenue - linked to lower oil prices
due to the coronavirus pandemic - have checked his ambitions.
The Senate can influence government policies but relies on
the executive to implement them.