Cement prices up by 27 per cent amid quality construction concerns

The dreams of lower construction costs might have eluded the real estate sector, as the building materials market witnessed another increase in cement prices, by about 27 per cent across the country.

An investigation by The Guardian revealed that operators under the Cement Manufacturers Association of Nigeria once again raised the prices of their brands. This has increased retail prices of a 50kg bag of cement from N7,500 to N8,500, depending on the location. In some areas like South East, prices have risen to N9,500.

The current increase is causing significant strain on budgets, disrupting project timelines, and raising serious safety concerns. This instability has forced many projects to a standstill and left contractors under pressure to find ways to cut costs, which could compromise building quality.

President, Building Control Prevention Guild (BCPG), Suleiman Yusuf, identified the root causes of the pricing issues and described it as “a perfect storm for the construction industry”. “From monopolies and high foreign exchange rates to soaring diesel costs, everything is working against affordable cement right now,” he said.

According to the National Bureau of Statistics (NBS), three companies; Dangote Cement, BUA Cement, and Lafarge Africa, control over 95 per cent of Nigeria’s cement production capacity.

Yusuf pointed out that this concentration has left the construction industry vulnerable due to limited competition among suppliers and high costs of foreign-sourced raw materials.

He said: “A near monopoly of the items allows manufacturers to manipulate the present situation to justify the hike in cement price. This concentration of power leaves buyers with few options, forcing contractors and developers to accept high prices or abandon projects altogether.”

For contractors and developers attempting to plan long-term projects, this lack of market competition complicates budgeting and project scheduling, creating major disruptions in a sector already struggling with Nigeria’s substantial housing deficit.

Yusuf said energy expenses compound the issue. With Nigeria’s unreliable power infrastructure, plagued by frequent outages that disrupt manufacturing operations, cement producers rely heavily on diesel generators to maintain production levels. In recent months, diesel prices have surged to about ₦1,200 per litre in some states, placing substantial pressure on production costs.

“Manufacturers are dependent on alternative power supply, and the recent increase in the pump price of Automotive Gas Oil (AGO) or diesel has simply made things worse,” Yusuf noted. “With diesel prices showing no sign of declining, manufacturers are left with no choice but to transfer these added costs to buyers, increasing the financial strain on Nigeria’s construction industry,” he added.

An estate surveyor and valuer, Femi Oyedele, pointed out that Nigeria’s dependence on imported gypsum, an essential ingredient in cement production, also plays a significant role in the current price instability, saying “The gypsum used in the manufacture of cement is not available in Nigeria and must be imported with high foreign exchange.”

This fluctuation in cement prices has a ripple effect across the construction sector, delaying projects nationwide. Yusuf warned that these delays “might lead to litigation in ongoing projects, variations in project cost, and delays in the start date of planned projects, high project costs and possible increase in abandoned projects.”

For many developers, these rising prices have become untenable, forcing them to slow down or even halt projects altogether. Oyedele echoed this statement, “Due to the price increase, many ongoing and planned construction projects have been slowed down, as developers struggle to cover escalating costs.”

The financial impact of these disruptions extends beyond developers and contractors. The construction industry contributes significantly to Nigeria’s economy, employing millions and accounting for 3.5 per cent of the country’s Gross Domestic Product (GDP) as of 2023.

As projects are delayed or abandoned, the loss of economic activity affects the job market and the broader economy, amplifying the effects of price instability in the cement market.

Yusuf, however, stated that some distributors are most likely taking advantage of the situation to inflate profit, “The major distributors of cement products are presently milking the consumers, as the markup price (about 50 per cent) on the factory price is too high for comfort. However, given the peculiarity of our business environment, manufacturers can manipulate the present situation to justify the hike in cement price. But our deplorable roads which are the main type of transporting the product could affect the cost.”

To address this crisis, experts agreed that government intervention is important. Yusuf suggested the government could stabilise prices by exploring rail as an alternative to road transport, which he believed could reduce costs in regions where trucking is currently the primary delivery method.

He further stated that “the government should de-monopolise the business by encouraging more entrepreneurs to come into the importation of raw materials for cement manufacturing and grant tax concessions for the importation of raw materials.”

Oyedele advocated the use of alternative materials, asserting that these materials would not only help alleviate cement demand but could also lower overall construction costs. “The government policies in which building owners depend solely on cement are causing the rising cost of cement.

“They should adopt the use of clay bricks, timber, plastic and aluminium as walling materials for buildings in Nigeria. These materials will reduce the pressure on cement and crash the price.”

Yusuf supports this shift toward sustainable building alternatives, pointing to Nigeria’s natural clay deposits as an “untapped resource” that could reduce the country’s reliance on imported gypsum. However, he lamented that “we have a lot of clay in the country, but unfortunately, some of the clay products are also expensive, because the Federal Government seems to turn a blind eye to it.”

Experts suggested that with government support, locally sourced materials could become viable, affordable alternatives to cement, providing relief to the market and creating jobs in material production

The financial strain on developers has raised pressing safety concerns, as rising prices create incentives for cost-cutting measures that could compromise construction quality. Yusuf warned that the current economic pressures “will encourage substandard materials of by-products such as blocks.

“It will affect the same reduction in the quality of concrete by some developers and contractors who might want to cut corners. The adverse effects most likely will be an increase in the collapse of the building.” This concern is not unfounded, as recent data from the BCPG reported 61 building collapses and 84 fatalities this year.

Oyedele expressed a comprehensive approach involving government intervention, saying there is a need for cooperation between the building industry and academic research. “The industry can mitigate the effects of the price hike on both developers and consumers by conducting regular research and development exercises on sustainable building materials and methodologies.

“There is no regular handshake between the academic researchers and the Nigerian building industry; the industry must be ready to sponsor the use of readily available building materials for construction in Nigeria,” he said.