In recent years, Nigeria has experienced a significant increase in the price of cement, a crucial building material for infrastructure development and construction projects. This surge in cement prices has sparked concerns among stakeholders across various sectors, prompting a closer examination of the factors driving the hike and exploring potential solutions to mitigate its adverse effects.
Current Cement Prices in Nigeria
To grasp the gravity of the situation, let’s examine some statistics regarding cement prices in Nigeria. In previous years, the average price of a 50kg bag of cement ranged from ₦3,500 to ₦4,500. However, recent reports indicate that prices have surged to as high as ₦9,000 to ₦12,000 per bag, representing a substantial increase. This escalation has raised alarms within the construction industry and among consumers alike.
As of the latest data, you can expect to find cement priced within the range of N10,000 to N14,000 per bag. On average, the cost of one bag of cement in Nigeria is approximately N11,000. However, prices may fluctuate based on factors such as brand, location, and market dynamics.
Cement Prices by Brand
Here's a quick look at the prices of different cement brands in Nigeria:
- Dangote Cement: N7,600 per bag in Lagos, N7,400 in Abuja.
- BUA Cement: N7,000 per bag in Lagos, N7,300 in Abuja.
- Lafarge and Purecem: Slightly higher prices compared to Dangote and BUA.
Bua Cement, a prominent brand in Nigeria, is typically priced in the range of N10,000 to N11,000 per bag. However, prices may vary based on location and market conditions.
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The pricing of “pop cement” or plaster of Paris (POP) cement can vary, but As of the latest data, you can expect them as follows:
- ABS POP Cement 40kg: N8,800
- AZ MOULDA 40kg: N8,500
- VEGALUX Paint: N4,500
- Kalsiceil Fibre Cement Ceiling Board (POP Ceiling Board Designs): N4,700
Impact of High Cement Prices
The surge in cement prices has reverberated across various sectors, leading to several adverse effects, such as directly contributing to elevated construction costs, impacting both public infrastructure projects and private development initiatives, posing affordability challenges for individuals and businesses involved in construction activities, which can deter investments in housing, commercial buildings, and other essential infrastructure, exacerbating Nigeria’s already pressing housing deficit.
The President of Oriental Block and Concrete Producers Association, Enugu State, Igwe Ukaegbu, had lamented that the continuous rise in cement price was negatively affecting the production output of and income of members of the association, urging the Federal Government to intervene in the situation by granting more licenses to industrialists to produce cement. He said, “The challenge we have is the cost of cement and even sand. Everything is now costly. We are not making sales as we used to; so, we are suffering. Before, one could sell 3,000 to 5,000 pieces of block in a month; but now, before you sell 1,000 pieces of block, it is very difficult. The cost of cement in Enugu now is N4,550 per bag.
Cement Usage in Construction
The number of bags required to build a 3-bedroom house in Nigeria depends on factors such as the size of the house, construction design, and structural considerations. On average, it may take between 400 to 600 bags for the entire construction. To set 100 blocks in Nigeria, you would typically need approximately 5 to 6 bags of cement.
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Stakeholder Perspectives and Solutions
To address the challenges posed by the hike in cement prices, it is imperative to consider diverse perspectives from various stakeholders within the construction sector.
Efe Ufuoma: Diversifying Building Materials
Efe Ufuoma notes that the housing deficit in Nigeria stands at a staggering 28 million units as of 2023, with an estimated investment of 21 trillion Naira required to address this shortfall. Given the current state of the economy, the conventional construction methods in Nigeria are becoming increasingly unsustainable. Nigeria’s construction industry has become overly reliant on cement, which is used extensively in various building processes such as casting, block molding, and tiling. We need to have reduced demand for cement to reduce the price increase and this can be achieved by diversifying the materials used in construction and promoting alternative building methods that are both sustainable and cost-effective.
We need to start looking inwards at readily available, more sustainable and more affordable building materials to bridge this housing deficit. In contrast, many other parts of the world utilize a diverse range of materials like wood finishes, wooden floors, and rammed earth houses, reducing their dependency on cement.
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Chinedu Osonwa: Enhancing Local Production and Competition
Chinedu Osonwa suggests that to address the price hike, we can focus on enhancing local production, reducing importation, and investing in modern technology and infrastructure within the cement industry. Promoting competition among cement producers fosters fair pricing and quality standards. Additionally, supporting alternative building materials, engaging stakeholders through consultative forums, and ensuring price stability in a conducive environment are key strategies.
John Adeokhor: Creating Cement Alternatives
John Adeokhor emphasizes the need to create an alternative for cement to curb the continuous increase in cement prices.
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Government Initiatives
Legit.ng reported that the federal government has announced plans to construct affordable and climate-smart houses using bamboo, targeting low- and middle-income earners across the country. The move the government believe will provide eco-friendly housing solutions for low- and middle-income earners. The initiative is coming at a time cost of cement and other building materials has become very expensive.
Cement Manufacturers' Perspective
On the flip side, cement manufacturers are complaining that the cost of production is rising. In 2024 alone, the three cement giants reported in their financial statements that they spent an estimated combined total of N3.64 trillion on production costs, about a 72% increase over the N2.12 trillion reported in the 2023 financial year.
Recent Market Trends
The cement market in Nigeria has seen relative stability, with prices moderating at an average of N7,500 per 50kg bag over the past six to eight months. Despite criticisms directed at major manufacturers like Dangote, BUA, and Lafarge for maintaining prices at this level-making cement less affordable and hindering construction sector activities-this price point has remained steady.
A recent market survey across various locations indicates that this stability is largely due to low demand and a slowdown in construction activities, which have been affected by inflation and an unstable local currency exchange rate. Industry observers are optimistic that this price stability could encourage increased construction activities, allowing investors to plan with more certainty. This is a marked contrast to the volatility seen in the second half of 2023, when cement prices surged dramatically from N5,000 to as high as N14,000 per bag.
Factors Influencing Cement Prices
Several factors contribute to the fluctuation of cement prices in Nigeria:
- Foreign Exchange Rate: Fluctuations in the naira's value affect import costs for raw materials and equipment.
- Fuel Subsidy Removal: Increased transportation costs due to the removal of fuel subsidies.
- Production Costs: Rising costs of energy and raw materials impact the overall production expenses.
- Demand and Supply: Market dynamics, including construction activity levels, influence prices.
- Dealer Actions: Some dealers sell cement at much higher prices, negating intended benefits for consumers.
Price Stability and Market Dynamics
In Nigeria's two major cities, Lagos and Abuja, cement prices have settled at an average of N7,500 for the leading brands, Dangote and BUA. In Lagos, Dangote cement sells for N7,600 per bag, while in Abuja, it goes for N7,400. BUA sells for N7,000 in Lagos and N7,300 in Abuja, with Lafarge and Purecem selling at slightly higher prices.
In Lagos, a cement dealer, Sebastin Ovie, mentioned that Dangote cement is more commonly stocked due to supply challenges with other brands, contributing to their higher prices. In Abuja, distributor Onwuka Charles noted that seasonal changes also affect cement sales, with lower demand during the rainy season.
Charles, who sells cement at N7,400 per bag with discounts for bulk purchases, highlighted the impact of competitive strategies, particularly those employed by Dangote. The company offers substantial incentives to distributors, such as tricycles valued at up to N2.5 million, for exclusive sales of Dangote Cement. This strategy has made it difficult for BUA's price reduction efforts to succeed.
BUA Cement's chairman, Abdul Samad Rabiu, attributed the failure of their N3,500 per bag policy to dealer actions, as they sold cement at much higher prices, negating the intended benefit for consumers. He also cited the naira devaluation and fuel subsidy removal as factors that made the policy unsustainable, leading to widespread inflation affecting the economy.
Other Building Materials
Prices for other building materials, such as iron rods, electrical wires, binding wire, nails, and tiles, have also moderated. In Lagos, a 16mm iron rod now sells for N20,000, down from N35,000 earlier in the year. Similar price drops have been observed for 12mm and 10mm rods. In Abuja, iron rod prices continue to fluctuate, with traders facing an unstable market environment.
Dealer Fidelis Ikechukwu noted that prices vary by size, with 16mm rods priced at N16,000, 12mm at N8,500, and 10mm at N6,500.
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