By GEB
Affordability question in cement operators’ planned capacity expansion
Aliko Dangote’s announcement that Dangote Cement is targeting a production capacity of 90 million tonnes by 2030, alongside the distribution of N15 billion worth of gifts to cement distributors, is more than a corporate celebration.
Lafarge Africa Plc is also targeting a yearly cement production of 5.5 million metric tonnes from two of its major lines: Ashakacem and Sagamu plants.
According to a notice sent to the Nigerian Exchange Limited (NGX) and its investing public, the cement manufacturer explained that Ashakacem will produce two million metric tonnes yearly, while Sagamu will do 3.5 million tonnes upon the completion of the plants’ expansion.
Similarly, BUA Cement is considering a fresh capacity expansion after its chairman, Abdul Samad Rabiu, met with a Chinese construction firm to discuss adding a new production line in northern Nigeria, a step that would raise total cement output to roughly 20 million tonnes yearly.
It is a strategic statement about scale, ambition and the future direction of Nigeria’s industrial economy. Yet, for millions of Nigerians struggling to build homes or undertake basic construction, the key question is simpler and more urgent: Will this expansion finally translate into cheaper cement and more affordable housing, or will it merely reinforce dominance in an already concentrated market?
Dangote’s Vision 2030, which aims to transform the group into a $100 billion enterprise, signals an era of aggressive industrial expansion. Cement sits at the heart of this vision. With a projected 90 million tonnes capacity, about 50 per cent more than Saudi Arabia’s entire production, Dangote Cement would rank among the world’s largest producers. On paper, such a scale should confer economies that lower unit costs, stabilise supply and dampen price volatility. In practice, however, Nigeria’s cement story has long defied this textbook logic.
In theory, increased capacity should lead to increased supply, improved distribution efficiency, and, ultimately, lower prices. With more plants, expanded grinding capacity and improved logistics, especially through the planned deployment of thousands of CNG-powered trucks, operators could reduce haulage costs, address supply bottlenecks and ensure steadier nationwide availability.
If these efficiencies are fully passed on to consumers, they could benefit in several ways. Cement shortages, which often fuel speculative price hikes, should become rarer. Quality consistency could improve with newer plants and technology. Export capacity could grow, strengthening Nigeria’s position as a regional supplier while earning foreign exchange.
However, Nigeria’s cement market does not operate in a vacuum. Dangote Cement already commands a dominant share of local production. Expansion that consolidates market power without corresponding competitive pressures may improve margins more than it improves affordability. The celebratory gifting of distributors, while commendable as a loyalty incentive, also highlights how centralised control of distribution channels can influence retail prices far beyond factory gates.
Thus, the real impact on cement products will depend less on capacity figures and more on market behaviour such as pricing discipline, transparency in ex-factory prices, distributor margins and regulatory oversight.
The persistent rise in cement prices in Nigeria is the result of multiple, overlapping challenges. First is the energy cost. Cement production is energy-intensive, relying heavily on gas, coal and alternative fuels.
Fluctuations in gas supply, foreign exchange constraints for imported inputs and rising energy tariffs all feed directly into production costs. Even large producers are not immune.
Second is foreign exchange volatility. Although cement is produced locally, machinery, spare parts and some raw materials are imported. The naira’s weakness inflates replacement and maintenance costs, which manufacturers pass down the value chain.
Third is a logistics and infrastructure deficit. Poor road networks, congestion at ports and insecurity on highways add significant transport costs. A bag of cement may travel hundreds of kilometres from plant to market, often at great expense. Dangote’s investment in CNG-powered trucks is a step forward, but it does not solve the broader infrastructure problem.
Fourth is market concentration. With a few dominant players controlling most of the production, pricing is often less responsive to supply increases than consumers expect. Even when capacity expands, prices can remain sticky upward, especially in the absence of strong competition or effective price monitoring.
Finally, distribution inefficiencies and rent-seeking play a role. From factory to wholesaler to retailer, multiple layers add mark-ups. In some cases, artificial scarcity is created to justify higher prices, particularly during peak construction seasons.
If Nigeria is serious about affordable housing and infrastructure development, cement prices must be addressed holistically. Manufacturers, starting with industry leaders like Dangote Cement, must commit to price transparency. Clear, publicly available ex-factory prices and recommended retail margins would limit arbitrary mark-ups. Expansion-driven efficiencies should be visibly reflected in pricing structures.
Investment in alternative energy must accelerate. Using gas more efficiently, adopting waste-to-energy solutions and scaling up renewable inputs can reduce long-term energy costs. Dangote Group’s broader industrial integration positions it well to lead in this case, but intent must translate into measurable cost reductions.
Logistics reforms are equally critical. The shift to CNG trucks is positive, but rail transport for bulk cement remains underutilised. Moving more cement by rail would significantly cut costs and reduce road damage.
Encouraging healthy competition is perhaps the most important lever. New entrants, regional producers and smaller players should be supported through access to finance, fair regulation and infrastructure. A market where multiple producers compete on price and service is more likely to deliver consumer benefits than one dominated by a single giant, however efficient.
Finally, distributors must be brought into a more accountable framework. Incentives, such as those announced by Dangote and other operators, should be tied not just to volume and loyalty but also to adherence to fair pricing and availability standards.
The government cannot afford to remain a passive observer in the cement market. Its role is not to fix prices arbitrarily, but to create conditions where fair pricing emerges naturally. First, regulators must strengthen competition oversight. The Federal Competition and Consumer Protection Commission (FCCPC) should actively monitor market conduct, pricing patterns and potential anti-competitive practices. Transparency and accountability are essential in a sector so critical to national development.
Second, the government must tackle infrastructure deficits. Better roads, functional rail networks and efficient ports reduce costs across the board. Every naira saved on logistics is a naira that need not be added to the price of cement. Third, fiscal and monetary policies must support industrial stability. Predictable energy policies, improved gas infrastructure and a more stable foreign exchange regime will reduce uncertainty for manufacturers and consumers alike.
Fourth, government housing programmes should leverage bulk purchasing agreements. By buying cement in large volumes at negotiated prices for social housing projects, government can help stabilise demand while ensuring affordability. Such agreements can also serve as benchmarks for fair pricing.
Lastly, public engagement matters. When manufacturers announce massive expansions and billion-naira incentives, citizens are entitled to ask how these translate into public good. The government should facilitate this conversation, ensuring that industrial success aligns with national welfare.
Dangote’s Vision 2030 represents extraordinary confidence in Nigeria and Africa’s industrial future. The planned cement capacity of 90 million tonnes, alongside refinery, fertiliser and petrochemical expansions, could reshape the continent’s economic landscape. The N15 billion distributor reward underscores the importance of partnerships in this journey.
Yet, scale alone does not guarantee social benefit. For cement, the backbone of housing, roads and infrastructure, the test is affordability. If expansion leads to lower, more stable prices, Cement producers’ strategy will stand as a model of inclusive industrialisation. If prices continue to climb despite growing capacity, questions about market structure and public interest will only grow louder.
Nigeria stands at a crossroads. With the right mix of corporate responsibility, competitive markets and proactive governance, cement can become a catalyst for affordable housing and economic growth. Without it, even 90 million tonnes may feel perpetually out of reach for the ordinary Nigerian builder.
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