In response to soaring inflation rates, distributors nationwide have recently implemented substantial price increases for cement and related products, causing upheaval in the building materials market.
Dealers and retailers were caught off guard by the sudden price adjustments, claiming they were not given prior notice. Apprehensive about further increases, many individuals rushed to stock up on supplies over the weekend.
Nigeria’s inflation rate rose to 22.4% in May, surpassing the upper limit of the Central Bank’s target range of 6.0% to 9.0%. The relentless inflationary pressures have made most building materials increasingly unaffordable, severely impacting the purchasing power of aspiring homeowners.
Due to its essential role in construction, Nigeria heavily relies on cement for modern housing development, which remains predominantly brick and mortar-based. Cement-based products are crucial components for constructing decent, durable, and sturdy buildings. Moreover, cement constitutes approximately 40% of the estimated building costs.
The Nigerian cement production market is dominated by three major producers: BUA with 17.6% market share, Dangote with 60.6%, and Lafarge with 21.8%. These dominant players are said to deter potential competitors from entering the market.
Despite Nigeria’s abundance of raw materials like limestone, marl, calcite, shale, and gypsum, the price of cement has been steadily increasing over the years, surpassing affordable levels.
Limestone deposits are plentiful in several states, including Abia, Akwa Ibom, Anambra, Bayelsa, Benue, Borno, Cross River, Enugu, Imo, Nasarawa, Ogun, and Sokoto. Additionally, gypsum deposits of about a billion tonnes are spread across Yobe, Adamawa, Bayelsa, and Anambra states.
Industry operators expressed concerns that the recent price hikes could further stifle an already stagnating industry, considering the pivotal role cement plays in all construction aspects.
Market research indicates that building material prices have skyrocketed by over 70% between last year and July 2023. In Lagos, Ogun, Ondo, and Abuja, a 50-kilogram bag of cement now sells between N4,900 and N6,000, while in some locations, prices range between N4,750 and N4,800.
Reacting to the price increases, block makers are now charging between N360 and N390 for 6-inch vibrated blocks and between N440 and N480 for 9-inch vibrated blocks.
Opinions differ on the cause of the surge. Some retailers attribute it to increased logistics and haulage costs due to fuel subsidy removal, while dealers blame it on a rise in factory prices set by the producers.
Kate Janet, a seller in Lafuwape, Ogun State, expressed surprise at the sudden change in price, noting that the factory raised prices overnight. She now sells a 50kg bag at N5,000 for the popular product and N4,900 for the other variant.
In the past, producers often cited high production costs, rising freight charges, and expensive power as reasons for the price instability in cement products.
“The recent increase in fuel prices has had a double impact on housing production, transportation costs, and product distribution across the country,” said Janet.
An anonymous dealer in Ikeja, Lagos, highlighted that the workers responsible for unloading cement trucks demand higher pay due to the high cost of living. These additional logistics expenses are then passed on to consumers, maximizing profits for the dealers.
Clement Achibong, a cement dealer in Akoka, Lagos, revealed that the price of cement surged by N150 within a week, from N4,850 to N5,000 per bag. While the exact reason behind the sudden price change remains undisclosed, speculation suggests a potential connection to the recent fuel subsidy removal, although no official statements have been released by the producers regarding this matter.
