With cement prices hitting N15,000 per bag in some parts of the country, the question on the lips of many Nigerians is what exactly it is that the cement producers are up to? Surely, it must be disappointing that whereas the Federal Government’s restriction of cement importation in the 2002 under a backward integration policy to encourage local production has delivered beyond expectation; our domestic cement producers are yet to shed that old garment of being competition-averse in a meaningful sense.
And this is a country that ought to be counting its manifold blessings in abundant raw materials, with over 2.3 trillion metric tonnes of limestone in reserves. Add to this the proximity of the cement plants to the limestone sites, the unique advantage of economy of scale, particularly with some of the major plants, notably those in Obajana, Okpella, Ewekoro, and Gboko sitting directly atop limestone and clay deposits, with immediate promise of reductions of initial transport overheads.
Again, thanks to the government’s backward integration policy; today, there is ample evidence that the policy has delivered. Presently, the country has a combined installed production capacity of between 60 to 65 million metric tonnes annually.
With total estimated domestic consumption at approximately 25 to 30 million metric tonnes, the country currently boasts of excess production of more than 30 million metric tonnes, leaving ample room for export to service the markets of our ECOWAS neighbours.
The paradox of a country whose cement prices are increasingly out of reach could not be starker.
The above are however hardly a denial of the extant problems that have rendered manufacturing particularly challenging. Top on the list is the high energy costs. Electricity and gas, in particular, are said to make up about 40% to 60% of production costs. The producers also contend daily with logistics and transport issues, particularly at a time of increasingly expensive fuel prices. Then also is the devaluation of the naira which brought with it its own strains on the cost of machinery, spare parts, and production inputs.
The issue is that these problems were there in 2023, 2024, 2025 and so could not reasonably be said to account for the sustained wave of high prices routinely unleashed at every turn by our cartel of cement producers. It is hard to imagine that the advantage conferred by regional concentration, hence proximity to the market, which ordinarily ought to have counted for something, particularly in mitigating the logistical issues somewhat, has thus far, no positive effect on their operations.
Nigerians should no longer be left to watch helplessly as the golden promises of the backward integration policy turn into mirage with cement producers merely rehashing the same familiar cant of logistics and high energy costs.
We therefore welcome the move by the Federal Competition and Consumer Protection Commission (FCCPC), to take a forensic look into probable price manipulation in the industry. It is what the current situation demands.
Surely, the concerns raised by the FCCPC, far from being academic, are largely shared by a broad section of Nigerians. After all, a market situation in which only the three companies actually account for over 90% of the entire production capacity cannot by any stretch of imagination be deemed as competitive in any meaningful sense. They are more appropriately, oligopolies with Nigerians reduced to being mere price takers; hence the need for intervention by FCCPC to get players to play by established rules.
That the consumer protection body has informed Nigerians that the probe is actually coming in the wake of its extensive industry-wide investigation that suggested possible manipulation of product prices in the Nigerian market is particularly instructive.
We expect the FCCPC to follow the investigation through. After all, there can be no disputing the fact that the current situation is neither healthy for the construction sector nor serve the interests of the larger economy.
In the end, the question of why cement prices are comparatively cheaper in relatively less, raw-materials-endowed countries like Kenya, Tanzania and even Togo than Nigeria is something that the ordinary Nigerian ought to be interested in.