Nigeria’s rising cement prices have come under fresh regulatory scrutiny, with the Federal Competition and Consumer Protection Commission (FCCPC) investigating whether the cost of the building material is being driven entirely by market conditions or by possible anti-competitive practices.

The investigation follows a three-month cross-border study by the FCCPC’s Anticompetitive Practices Department, which compared Nigeria’s cement market with those of Kenya, Tanzania, South Africa, Egypt, Morocco, Algeria and Togo.

The commission said its preliminary findings showed that cement is significantly more expensive in Nigeria than in several of the countries studied, despite the country having substantial limestone deposits and far more production capacity than it currently consumes.

Nigeria has an estimated installed cement production capacity of between 60 million and 65 million metric tonnes annually, while domestic consumption is put at between 25 million and 30 million tonnes.

The apparent surplus has raised questions over why prices continue to rise rather than fall as supply capacity expands.

A 50kg bag of cement that sold for between ₦9,300 and ₦9,700 in January had increased to between ₦10,500 and ₦13,000 by mid-year. By July, prices had reached as high as ₦13,000 to ₦15,000 in some parts of the country.

The FCCPC said the price difference becomes more pronounced when Nigeria is compared with other African markets.

Its findings put the price of a 50kg bag at about US$5.40, equivalent to ₦7,344, in Kenya, while the same quantity sold for about US$4.80, or ₦6,528, in Tanzania. In Togo, which the commission noted does not have limestone deposits, a 50kg bag cost about US$6.75, equivalent to ₦9,180.

“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,” the FCCPC said.

FCCPC tests industry’s cost argument

Cement manufacturers have attributed the increase in prices to several operating pressures, including high energy costs, naira depreciation, imported machinery and spare parts, transportation and logistics expenses.

The FCCPC said it is examining those explanations against verified information on production costs, capacity utilisation, pricing structures and other market conditions.

The investigation will determine whether the price increases are the result of legitimate increases in the cost of doing business or whether factors such as coordinated pricing, abuse of market power, restrictions on supply or anti-competitive distribution practices may be involved.

The commission has issued notices of the commencement of investigations and summonses to key industry players, requiring them to provide information on pricing methods, production levels, capacity utilisation, exports, and commercial relationships.

FCCPC Executive Vice Chairman and Chief Executive Officer, Tunji Bello, said the investigation was necessary because cement prices have consequences far beyond the construction industry.

“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,” Bello said.

He stressed that the investigation was not aimed at preventing cement manufacturers from making legitimate profits, but at determining whether competition in the industry is functioning properly.

Experts call for wider look at cement supply chain

The FCCPC’s findings have also prompted calls for a broader examination of the factors influencing cement prices.

Soji Adeniji, Chairman of the Lagos Chamber of Commerce and Industry Construction Group, said his experience with a construction project abroad had reinforced concerns about Nigeria’s relatively high cement prices.

Also Read: Inflation eases to 15.43% as food prices jump in July

He said a contact in Canada who considered importing Nigerian cement eventually found supplies from Turkey and other markets more competitive.

Adeniji argued that the industry’s pricing structure should be examined across the entire supply chain, from limestone extraction and cement production to transportation, taxation and distribution, rather than attributing the problem to a single factor.

Professor of Economics and Public Policy at the University of Uyo, Akpan Ekpo, similarly suggested that supply constraints could be contributing to price pressures and called for stronger support for businesses involved in cement production and distribution.

Other experts have proposed reducing Nigeria’s dependence on cement by expanding research into alternative construction materials.

Samuel Shonibare, a researcher at Yaba College of Technology, said materials capable of partially replacing cement in concrete could help reduce demand for cement and potentially bring down construction costs.

Meanwhile, Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise, urged the FCCPC to strengthen its international comparison by examining the actual cost structures of producers in the countries used as benchmarks.

He said factors such as production costs, taxes, energy prices and logistics expenses in those markets would need to be compared with Nigeria’s before firm conclusions could be reached on why prices differ so sharply.

The FCCPC said the investigation will ultimately establish whether prevailing market conditions justify the prices Nigerians currently pay for cement or whether practices within the industry are restricting competition and contributing to higher prices.

Meiza Nigeria