By Chibuzor Alli
Cement prices in Nigeria are higher than in several other African countries despite the country’s large production capacity and access to limestone, the Federal Competition and Consumer Protection Commission (FCCPC) says.
The commission has opened an investigation into possible price manipulation in the cement industry after a three-month study raised questions about whether current prices are fully explained by market conditions and production costs.
The study, conducted by the FCCPC’s Anticompetitive Practices Department, compared Nigeria’s cement market with those of Kenya, Tanzania, South Africa, Egypt, Morocco, Algeria and Togo.
It examined factors including limestone availability, production capacity, domestic consumption and retail prices.
In a statement issued on Tuesday, FCCPC Director of Corporate Affairs Ondaje Ijagwu said:
“Findings from an industry-wide investigation conducted by the Federal Competition and Consumer Protection Commission suggest possible manipulation of prices of cement in the Nigerian market.
“This is the preliminary summation of the 40-page field reports collated following a three-month cross-border study by the Anticompetitive Practices Department of the Commission, undertaken in response to widespread public complaints over the high cost of cement, a common staple in the country’s construction industry.”
The FCCPC said Nigeria has an installed cement production capacity of between 60 million and 65 million metric tonnes a year, while domestic consumption is estimated at 25 million to 30 million tonnes.
Despite the excess capacity and Nigeria’s position as a net exporter to neighbouring countries, cement prices have continued to rise.
A 50kg bag of cement sold for between N9,300 and N9,700 in January, according to market information reviewed by the commission. By the middle of the year, the price had risen to between N10,500 and N13,000, while prices of N13,000 to N15,000 were reported in some areas in July.
The commission said prices were lower in some of the African countries included in its comparison.
In Kenya, where the population is about 58.6 million and cement demand was estimated at 9.3 million tonnes in 2025, a 50kg bag cost about $5.40, equivalent to N7,344.
In Tanzania, a country with a population of about 66.3 million and similar cement demand, the same quantity cost about $4.80, or N6,528.
In Togo, which the FCCPC said has no limestone deposits, a 50kg bag sold for about $6.75, or N9,180.
The commission said the differences raised questions about why Nigeria’s production capacity and raw material resources had not resulted in lower domestic prices.
Industry participants have cited energy costs, the depreciation of the naira, imported machinery and spare parts, and transport and logistics costs as factors behind the price increases.
The FCCPC said it was examining those explanations against verified information on production costs, capacity utilisation, pricing and other market conditions.
“Of particular concern to the commission is that this level of production capacity has not resulted in the downward pressure on domestic prices that might ordinarily be expected in a competitive market with substantial excess capacity.
“Information provided by industry participants has identified energy costs, depreciation of the Naira and its effect on imported machinery and spare parts, as well as transportation and logistics costs, among the factors contributing to cement prices.
“The commission is testing these explanations against verified information on costs, production, pricing and market conditions. However, the weight of preliminary findings provides sufficient grounds for the investigation to continue,” the statement said.
The FCCPC said the investigation would examine possible collusion, abuse of market power, restrictions on domestic supply and anti-competitive distribution practices.
It has issued notices of investigation and summonses to key companies, requesting information on pricing methods, production, capacity utilisation, exports and commercial relationships.
“Next is to determine whether prevailing cement prices can be explained by legitimate costs and market conditions, or whether there is evidence of coordinated conduct, abuse of market power, restriction of domestic supply, anti-competitive distribution practices or other conduct contrary to the provisions of the FCCPA,” it added.
FCCPC says investigation not about price controls
FCCPC Executive Vice Chairman and Chief Executive Officer Tunji Bello said the investigation was necessary because cement plays an important role in the Nigerian economy.
“Cement occupies a strategic place in the Nigerian economy. Its price affects the cost of building a home, developing commercial property, delivering public infrastructure and, ultimately, the cost of doing business. When concerns persist about how such an important market is functioning, the Commission has a duty to look beyond assumptions and establish the facts,” Bello said.
He said the investigation was not intended to dictate how companies operate or prevent them from making legitimate profits.
“Businesses are entitled to make legitimate commercial decisions and earn returns on their investments. Competition law does not prevent that. Its purpose is to protect the competitive process, so that prices, output and other market outcomes are determined by genuine competition rather than conduct that unlawfully restricts it,” Bello said.
The investigation comes as rising cement prices continue to increase the cost of construction and housing in Nigeria.
Experts question reasons for high prices
Business leaders and economists said several factors could be contributing to the high price of cement, including transport costs, poor roads, taxation, energy costs and supply constraints.
Soji Adeniji, chairman of the Lagos Chamber of Commerce and Industry Construction Group, said his experience on a recent project had highlighted the price difference between Nigerian cement and products available in other countries.
“I was in Canada recently, and a friend of mine who is having a project in Canada was contemplating buying cement from abroad. He was of the opinion that, why can’t we buy cement from Nigeria, as in he wants to import cement from Nigeria and stuff like that.
“By the time he did his calculations, he found out that cement is not as cheap in Nigeria, and that we could arrange for the importation. Eventually, as the report stated, he found out that Turkey is more price-friendly. He was able to establish a relationship with Turkey. Of course, the Tanzania, Kenya market too was a bit preferable, which boils down to the fact that the price of cement in Nigeria is high. But then the question would be, what is the location of that kind of high cost?”
Mr Adeniji said the reported shortage of cement also required further investigation.
“Why are we having scarcity? Some people are saying because it was raining and therefore limestone deposits, well, that is not, I mean, for me, for the past two weeks now, since the beginning of August, there has not been much rainfall to affect any production. But what is happening to the limestone would be another thing,” the LCCI construction group leader stated.
He said the entire production and distribution chain should be examined.
“If you check the production line and look at that production chain line, you look at it from limestone to the facility that is an infrastructure facility for production.
“You look at the economy, which is stable, so we cannot be saying that things are changing. The economy is stable, and has been consistent for too long a time. Then other challenges, maybe with the manufacturer.
“You’d notice that Lafarge has just changed. A company called HBM has just bought over Lafarge, meaning that maybe the management issue or something like that. So, when you look at that production, up to the level of distribution, you’ll ask again, why are we experiencing this? They will be telling you logistics, transportation for delivery, and that kind of thing.
Mr Adeniji also identified taxation as a possible factor.
“Some people from the manufacturer’s side too might be talking about the issue of double taxation, and things like that. If the tax regime is not favorable, there’s nothing definite.”
The experts called for government action to increase supply and address factors contributing to higher prices. They also recommended research into alternatives to cement for concrete production.
Akpan Ekpo, a professor of economics and public policy at the University of Uyo, said the price increases could be linked to supply constraints.
“This could be more demand than supply. So what the government should do is that you look at that sector properly and see whether you can help that sector.
Mr Ekpo called for better access to finance for businesses involved in the cement industry.
“Otherwise,” he said, “you’d keep having this problem of high cost of cement.”
Samuel Shonibare, a researcher at Yaba College of Technology and member of the Nigerian Institute of Building, called for greater use of alternative materials.
“I urged the government to look for alternatives to the use of cement in construction. There has been a lot of research that studied other materials that can be used to replace cement partially in concrete production.
“I’m trying to look at the probability of using rice shells as partial replacements for cement in concrete production. It’s one research project I’m currently working on. Not that I’m even trying, I’m on it.
He said reducing the use of cement could help lower construction costs.
“So the recommendations I would make for now is telling the stakeholders in the construction industry to focus on research that will yield an alternative material to cement. If the producers of cement have discovered that there’s a shift in the usage, I think that will lead to a reduction in the price,” Shonibare noted.
Muda Yusuf, chief executive of the Centre for Promotion of Private Enterprise, called for more detailed research into the reasons for the price differences between Nigeria and other countries.
“In order for a balanced view, it is important to hear from the FCCPC what the producers and distributors of cement have to say. Secondly, we need to know the cost structure of the cement producers and suppliers in the foreign countries. It will help us gain clear insight.”
Mr Yusuf said comparing production costs, taxes, logistics and energy costs across countries would provide a clearer picture of the differences.
“The report needs to be more rigorous and show us the cost structure in the other countries. We need to know their cost of production, taxes, logistics and energy. Having the factors that underlie the prices will help (the probe), since it is presented as a comparative report.”
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