Nigeria: search for new markets
While Nigerian cement volumes rose sharply in the 3Q20 amid the COVID-19 pandemic, there is limited room for strong volume and price growth. For the oligopolistic domestic cement industry, competitive pressures are a central theme and cost efficiencies remain key. Given challenges locally, new export opportunities could potentially be opening up. By Afrinvest, Nigeria.
For Nigeria’s cement industry, competitive pressures remain
important despite the sharp rise in domestic volumes in the 3Q20
Following the entry of BUA Cement, the major theme in the Nigerian cement industry before 2020 was competition. The company was closing in on Lafarge Africa and expected to overtake it to become the second-largest producer in the country by capacity and sales volume in 2021. BUA also listed its shares on the Nigerian Stock Exchange (NSE) in 2019, making it the second-most capitalised cement company behind Dangote Cement, the domestic industry leader. Meanwhile, Lafarge Africa had also started to recover after the divestment of its South African operations helped pay off expensive debt that had crippled operations and profitability after the acquisition of Unicem amid Nigeria’s 2015-16 economic crisis.
The strongest factor underlying expectations of competitive pressures are the struggles of the Nigerian economy, where a period of rapid growth pre-2015 has given way to a prolonged slump since.
