Market News

By Arinze Nwafor

Building sector operators have warned that the erratic surge in cement prices is worsening Nigeria’s housing crisis by driving up construction costs, property values, and rents.

The warning followed the recent surge in the price of a 50kg bag of Dangote Cement to over N15,000 in some locations, despite an ongoing investigation by the Federal Competition and Consumer Protection Commission into possible price hikes in the cement industry.

The operators, who spoke in separate phone interviews with The PUNCH, called for urgent intervention in the cement market, including the conclusion and publication of the FCCPC investigation, greater competition among manufacturers and action against suspected cartels and other market abuses.

The Principal Partner, Space Button Architecture Limited, Amusan Oluseyi, said the increase remained difficult to justify given Nigeria’s large limestone deposits and substantial cement production capacity.

“It is quite difficult to clearly explain why the cost of cement is rising at such an alarming rate in parts of Nigeria, especially since our nation possesses large quantities of limestone resources with an established cement production capacity estimated between 60 and 65 million metric tonnes annually, while domestic consumption is estimated between 25 and 30 million metric tonnes,” Amusan said.

He urged the FCCPC to take decisive steps to protect prospective homeowners from the impending cement price increases. “In my view at this point, it is very important for the Federal Competition and Consumer Protection Commission to take decisive measures to ease the situation, especially for individuals who intend to change status from tenants to landlords,” he said.

Amusan said the price volatility had already spread beyond construction costs to the broader housing market. “This erratic surge in cement market price has impacted the housing sector negatively by increasing the cost of construction, value of housing and rents,” he warned.

The architect also urged the government and regulators to promote alternative building materials and construction methods to reduce the sector’s dependence on cement.

“The government can also eradicate the abuse of the cement market by the dominant few like Dangote Cement by supporting research and commercialisation of alternative building methods that are more sustainable,” Amusan said.

He cited the use of laterite-based construction materials, including Latcrete blocks developed by Nigerian architect and artist Demas Nwoko, as an example of alternative construction technology.

However, the Chairman, Lagos Chamber of Commerce and Industry’s Engineering and Construction Group, Soji Adeniji, attributed the latest price spike largely to temporary scarcity rather than an official price increase by cement manufacturers.

“The prices have not gone up. So what people experienced then was like a brief moment of scarcity,” Adeniji said.

He linked the scarcity to recent plant maintenance by Dangote Cement and access restrictions affecting some material depots, saying improved supply should ease the situation.

“I believe the issue is that Dangote Cement recently finished their plant maintenance, and they’ve just resolved the issue of accessibility to their material sites, so I guess between this week and next week, we should be having enough product in circulation,” he said.

Adeniji described the prevailing prices as artificial, arguing that inadequate supply had created room for distributors and other players to impose arbitrary margins.

“For me, I think the price we have now is artificial. Just because of demand and supply, this thing is playing out. Because of insufficient quantities, then people are putting arbitrary figures on it. Once they flood the market again, prices will definitely come down,” the LCCI construction group chief said.

The construction operator said he had not received any official notification from Dangote Cement announcing a new price.

“I’ve not received any official notice from Dangote themselves to say that the prices are going up. For me, whatever we are seeing now, it’s not directly from Dangote; it’s induced, but we cannot attribute it to changing prices because the price has not been officially announced,” Adeniji said.

Similarly, the Public Relations Secretary, Nigerian Institute of Quantity Surveyors, John Agbezin, identified several factors contributing to cement production and distribution costs, including energy, foreign exchange, logistics, security and multiple taxes.

He said the removal of fuel subsidy and volatility in energy prices had significantly increased production costs for manufacturers. “Energy, diesel, gas, they all use all these things to run their plants. And of course, with fossil fuel removal and the effects of volatility, energy costs are doubled,” Agbezin said.

He added that imported inputs and foreign exchange pressures also affected the cost of locally manufactured cement. “When you look at the diesel additives and coal, all these things are forex-dominated. So, even though Dangote is local, all these products that they import actually contribute to the expenses too,” he said.

Agbezin also cited poor roads, insecurity and longer haulage routes as factors that increase distribution costs. “If a guy is travelling with his truck, instead of him passing a road that will take him less than three hours, he has to go and pass another road that will take him six hours because he avoids the hotspots. Those are very, very big factors that can add as much as N3,000 for a bag,” he said.

He, however, raised concerns about supply shortages amid strong demand from major infrastructure projects.

“There is too much demand and less supply. There is no way to not have an increase. A lot of projects are going on anyway. For example, the coastal roads, I know a lot of suppliers that they will tell you they don’t have products. But that coastal road, they are always going there because they know that they will get their money,” Agbezin said.

The quantity surveyor also criticised the lack of transparency in cement pricing and urged the FCCPC to conclude its investigation and publish its findings. “They are already doing an investigation; they need to publish their findings and sanction all the cartels, if there are any known,” Agbezin said.

He called for greater transparency from manufacturers and distributors to prevent excessive margins from being passed on to consumers. “Let there be transparency in the factory and retailing price. If the factory is N1,000, let it be published that from the factory it is N1,000. Let it be transparent,” he said.

Agbezin also called for increased competition in the cement industry, arguing that Nigeria should expand local production capacity beyond the dominant manufacturers.

“When it comes to industrial enterprises, make sure that you increase local capacity. Let other people that are there, apart from Dangote, BUA and Lafarge, let there be more competition, let there be more pressure,” he said.

He said greater competition, improved energy supply, lower logistics costs and a reduction in multiple taxes would help stabilise cement prices and improve the predictability of construction costs.

The operators maintained that while some of the latest price increases could reflect temporary supply constraints, sustained volatility could deepen the housing crisis by making home construction increasingly unaffordable for Nigerians.