Mining, Oil & Gas

Dangote effect: Kenya, Tanzania enjoy better cement prices than Uganda

By Roger Kyazze

While Ugandans continue to choke on high prices of cement, their Kenyan and Tanzanian counter-parts are enjoying relatively cheaper and more stable prices. The market instability in the Ugandan market recently led to panic buying, hoarding and creation of an artificial cement crisis resulting into the recent skyrocketing of prices.

Simba cement, the latest entrant in the Uganda cement industry recently promised that their advent to the Ugandan market would drive prices down to Shs 20,000/= per 50 kg bag,  which has not yet happened and may not happen soon largely because of the structure of the cement manufacturing set up in the region.

It is a well-known fact that in East Africa, Lafarge Holcim dominates the cement market with a 27 per cent market share, followed closely by Athi River Mining (ARM) in Kenya with a 17 per cent share. Lafarge is the largest cement producer with 50 million metric tons per annum capacity.

Nigerian cement maker, Dangote, plans to start producing cement in Kenya in 2019, through its Kitui based plant. However, the low cost imports have already infiltrated the Kenyan market from Dangote’s plant in Ethiopia. The effect has been driving down the price of cement in Kenya.

In neighboring Tanzania, the Dangote plant in Mtwara 400 km south of Dar-es-salaam which begun production two months ago has seen the firm take 22 per cent of the cement market share there. However, with the planned entry of Dangote into the Ugandan market through its proposed plant in Jinja, in line with its expansion plans, it is expected that the Dangote effect will eventually drive prices down in Uganda as well, although it cannot be predicted when exactly that will happen.

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