Demand for cement in the East African
Region is anticipated to remain strong in the medium term, supported by
the resurgence in infrastructure and housing sectors.
Also, apart from the associated energy
costs and the availability of cheap imports from some Asian countries,
demand for cement in East Africa has continued to rise.
The growing demand for cement is
expected to boost investments in new cement production in line with the
retrofitting of old cement plants and the expansion of existing cement
production capacity.
Tanga Cement Managing Director Mr
Reinhardt Swart said in an interview that there is huge potential of
investing in the cement industry due to rising demand for the commodity
in the region.
“Despite the increased cement plants in
Tanzania and other countries in the region, there is still huge demand
for cement to cater for increase investment in infrastructure projects,”
he said after receiving certificate recognising his company as one of
the tops superbrands.
He said the award is sign of the efforts
put by the company to maintain quality of the product that made
customers to vote and give positive feedback.
Investing heavily on cement production
was insufficient if the products are of low quality that does not meet
market expectations and international standards.
Mr Swart said the sprout of many cement
factories in Tanzania and the rest in the region was a challenge and
opportunity to capitalise at the same time.
“It makes scrutinise at ways to remain
in the market competing and raising the quality of the cement products,”
he said. He also shared the manufacturers and cement makers concern
over increasing importation of cheap cement from China and Pakistan into
East Africa, saying it is creating excessive competition in the market.
Leading cement producers with highest
market share in East Africa include Twiga Cement, Tanga Cement, Bamburi
Cement in Kenya and East Africa Portland Cement Co.
The sub-Saharan Africa’s largest cement
producer, Dangote, currently is building a 500-million US dollars cement
plant in Mtwara Region, Tanzania. Overall, in East Africa, capacity
additions by 2018 are expected to increase the region’s cement capacity
to 13.45 million [metric tons] per year.
Certain high-growth markets - such as
those in the DRC , Rwanda, and Burundi -which are characterised by low
cement consumption per capita, are expected to continue to grow and
attract imports from cement manufacturers based throughout East Africa.
Key drivers for cement demand in East
Africa are infrastructure development, urbanisation, high regional gross
domestic product (GDP) growth rates, and high population growth.
“The increasing demand is fuelled by an
upsurge in commercial projects, housing developments and mega government
infrastructure projects, such as ports, railways and road-cement
manufacturers, in East Africa,” he said.
Most countries from this group
have had political instability, which has curtailed the development of
the infrastructure and construction sectors.
The implementation of sustainable cost
optimisation strategies focusing on alternate fuels, lowcost technology,
and value-adding models are expected to reinforce the local producers’
presence and competitive positioning in the East African cement
industry.
Modernisation at the plants, improvement
of plant processes, and absorption of the best practices in mining and
manufacturing - in the pursuit of cost efficiency - is required if East
African cement producers are to compare favourably to leading global
cement producers in terms of profitability.
East Africa’s average consumption is low
and the process of catching up with international averages will drive
future growth. The Democratic Republic of the Congo (DRC ), Kenya, and
Burundi are expected to display the most rapid consumption growth.
Cement consumption per capita in East
Africa is significantly below the global average of 500 kg, with the
region’s largest markets in Kenya (80 kg) and Ethiopia (61 kg) - both
indicating significant potential for growth.
This reflects high domestic prices,
which have constrained demand. By way of comparison, in sub- Saharan
Africa, Nigeria remains the largest consumer, with an estimated 18.3
million MT consumed in 2013, followed by South Africa, with 12.2 million
MT. Together these two countries represent half of sub-Saharan Africa’s
cement consumption.
Angola, Ethiopia and Ghana all together
consume between 5-6.5 million tonnes while mile Kenya (3.7 million MT)
and Tanzania (3 million MT) are East Africa’s leading cement consumers.
The rapid expansion of production
capacity across Sub-Saharan Africa has led to a sharp drop in cement
imports, reversing the deficit that has built up over the past decade.
Nigeria, which as recently as 2010 was
importing 500 million US dollars worth of cement each year, has seen
imports slump to 139 million US dollars in 2012, while Ethiopia’s
imports have fallen by 75 per cent, to just 43 million US dollars over
the same period.
Source: Daily News, reported from Dar es Salaam, Tanzania
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