Why cement prices remain high in Nigeria, HBM CEO explains

HBM Nigeria has blamed foreign exchange exposure, high energy costs and manufacturers' reliance on privately generated electricity for the high price of cement in the country. The Chinese-owned cement maker's chief executive, Lolu Alade-Akinyemi, said a large share of production inputs are imported or priced in foreign currency, leaving producers exposed to movements in the naira.

Alade-Akinyemi spoke in Lagos at a question-and-answer session during the Experiencing Panterra event. He was represented by HBM's General Manager of Readymix Concrete, Emmanuel Ilaboya.

Dollar-priced inputs

He said the exposure cuts across the production chain, including items sourced locally. "And especially for the cement and concrete industries, where the majority of what we use to produce is imported. In fact, the gas and the oil, despite the fact that they are made locally, will be paid in dollars," he said.

The HBM chief said the relative stability of the exchange rate over the past year had improved manufacturers' ability to forecast expenses and plan production. He added that HBM was focused on operational efficiency to prevent increases in imported input costs from being fully transferred to consumers.

Power plants and production costs

Electricity is the second major cost driver. Unlike manufacturers in some competing markets that can depend substantially on public electricity, Nigerian cement producers often have to invest heavily in their own power infrastructure.

"There is no cement manufacturer in Nigeria that can rely on that. You have to build your own power plant, you know, to produce the power that you can use, that costs money," Alade-Akinyemi said.

The combination of energy expenses and foreign exchange exposure, he explained, makes it difficult for manufacturers to substantially reduce production costs.

Low consumption, large room to grow

Despite the pressure, HBM sees considerable growth potential in Nigeria's cement industry. Alade-Akinyemi said cement consumption in Nigeria is below 150 kilogrammes per person, compared with about 500kg in Egypt and 700kg in South Africa.

"What that tells you is that there is a huge opportunity," he said.

He also estimated capacity utilisation among manufacturers at between 20% and 30%, suggesting significant unused production capacity across the industry.

The comments come as HBM seeks new distributors to strengthen its distribution network and compete for a bigger share of Nigeria's building materials market. Prospective distributors are asked to provide at least ₦250 million in working capital, a 500-square-metre warehouse and access to five 20-tonne or 40-tonne trucks.

HBM is stepping up its battle with Dangote Cement and BUA Cement as production capacity expands and retail prices remain as high as ₦15,000 per 50kg bag.

Real estate investors want data

At the same event, Panterra CEO Tayo Odunsi called for greater transparency in Nigeria's real estate sector, saying investors require reliable information to make decisions.

Panterra Chief Investment Officer Ayo Ibaru said currency stability, access to financing, security and partnerships with investors from the Global South are increasingly shaping West Africa's property market.

For builders and consumers, the near-term outlook on cement prices rests on two things the HBM chief flagged: how the naira holds and what producers spend to generate their own power. A wider distributor network could add competitive pressure to a market long dominated by a few large producers.