Why Cement Prices Remain High in Nigeria Despite Local Production, Agora Policy Explains
- Agora Policy explained the reasons cement prices are higher in Nigeria than in most countries
- The Tink Tank noted that Nigeria has surplus cement capacity, but prices remain high
- Agora Policy called for competition reforms instead of reopening imports
Oluwatobi Odeyinka is a business editor at Legit.ng, covering energy, the money market, technology and macroeconomic trends in Nigeria.
Agora Policy, a Nigerian policy think tank, has explained that weak competition and high market concentration are the reasons cement prices are rising in Nigeria, despite the country having more than enough production capacity.
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In a policy insight titled ‘Market Power and Failure of Competition Policy in Nigeria’s Cement Industry’, the organisation said persistently high cement prices are driven more by market structure than by production costs.
It noted that Nigeria has been self-sufficient in cement production since 2012 and currently has installed capacity far above local demand, The Cable reported.
Prices rising despite excess supply
Despite this surplus, prices have remained elevated, a development Agora Policy linked to the dominance of three major producers: Dangote Cement, Lafarge Africa and BUA Cement. The think tank said the situation has translated into unusually high profit margins for these firms.
According to the report, average operating profit margins for cement producers stood at about 49% as of September 2025, up from roughly 30% in 2024. Agora Policy said this level of profitability is significantly higher than what is observed in North America, Europe, Asia and most of sub-Saharan Africa.
The organisation said the coexistence of excess capacity, high prices and strong profitability suggests that pricing outcomes are shaped mainly by market power rather than cost pressures.
“Nigeria has built the capacity it set out to build, but the benefits of that achievement have yet to show up fully in prices paid by households, builders, and government,” the report stated.
While cement producers often cite taxes, energy costs, transport challenges and financing constraints as reasons for high domestic prices, Agora Policy said those arguments raise further questions. It noted that Nigerian cement is often sold profitably at lower prices in export markets, where many domestic levies do not apply.
Cement producers benefit from zero imports
Agora Policy traced the current structure of the industry to import-substitution policies introduced in the late 1990s and early 2000s. These policies, which included tariff protection, tax incentives, foreign exchange support and exclusive limestone concessions, succeeded in boosting local capacity and ending imports but also resulted in a highly concentrated market.
According to the think tank, the consumer-side promise of affordable prices driven by competition has not materialised. It explained that in capital-intensive industries like cement, excess capacity can be used strategically to deter new entrants and preserve dominance.
Producers exercising pricing power
Despite surplus production, the report said major producers continue to exercise pricing power through control of limestone deposits, scale advantages, regional market segmentation and high transport costs that limit consumer choice.
Agora Policy also warned that high cement prices act as a “hidden tax” on housing and infrastructure, raising the cost of homes, roads, schools and hospitals, and reducing what governments can achieve with limited resources.
The organisation argued that reopening cement imports would not offer a sustainable solution, given high transport costs and logistical challenges, particularly for inland markets. Instead, it called for competition-focused reforms.
These include opening access to limestone deposits, treating logistics as a competition issue, addressing regional dominance and strengthening oversight by the Federal Competition and Consumer Protection Commission (FCCPC).
Agora Policy said Nigeria’s cement challenge is not about capacity building but about restoring competition. It stated that without stronger safeguards, industrial policies risk entrenching dominance at the expense of affordable housing, infrastructure delivery and inclusive growth.
Source: UGC
Dangote explains why Nigerian cement costs more
Legit.ng earlier reported that Africa’s richest man and President of Dangote Group of Industries, Alhaji Aliko Dangote, explained why cement produced by his company is often cheaper is more expensive in Nigeria than countries that import from Nigeria.
The industrialist argued that cement sold in Nigeria is more expensive than exported cement due to multiple taxes and levies collected by the Nigerian government.
He listed the taxes to include income tax, education and health levies, VAT, and withholding tax. Dangote Group is Nigeria's largest taxpayer.
Proofreading by Funmilayo Aremu, copy editor at Legit.ng.
Source: Legit.ng
