NIGERIA | CEMENT | SECTOR REPORT

Cementing Resilience: Strengthening Growth in 2025

The cement sector has recently delivered a mixed performance, shaped by both encouraging demand trends and persistent macroeconomic challenges. On the upside, rising demand"”driven by renewed interest from both government and private sector players"”has provided a lift to the industry. However, escalating inflation and continued depreciation of the Naira have significantly increased production costs and triggered considerable foreign exchange losses.

Government spending on infrastructure and construction has been a key catalyst for demand growth, as efforts intensify to bridge Nigeria's infrastructure gap, currently estimated at 30% of GDP"”well below the World Bank's benchmark of 70%. The private sector has also played a role in this recovery, with the real estate and construction industries showing signs of normalization compared to the previous year, despite lingering high interest rates.

Capacity expansion is another notable development in the sector. BUA Cement, for instance, has increased its production capacity from 11 million metric tons (MT) to 17 million MT, a move expected to boost sales volumes in the medium to long term.

Despite the government's interventions to stabilize cement prices, these efforts have yet to yield significant results. Market prices remain elevated, reflecting broader macroeconomic pressures, particularly high production costs.

Profitability across the sector remains under significant pressure, largely due to escalating operating expenses driven by surging raw material and energy costs. This challenging environment has been further exacerbated by the persistent depreciation of the naira, which has led to considerable foreign exchange losses for cement manufacturers. Notably, key industry players"”BUA Cement, Dangote Cement, and Lafarge Africa (WAPCO)"”collectively recorded FX losses of approximately ₦365.70 billion, marking a 43.36% increase year-on-year and significantly weighing down overall profitability.

Looking ahead, demand is expected to remain strong in the short to medium term, supported by ongoing infrastructure projects. While growth prospects remain favorable, industry players must navigate persistent challenges. In response, many companies are adopting strategies focused on enhancing operational efficiency and managing costs more effectively.

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