Why our cement sells for N1,800 in Zambia but N3,500 in Nigeria—Dangote

The management of Dangote Cement Plc has clarified that the price of a bag of cement from its factories and plants across Nigeria (as of 12th April 2021) is N2,450 in Obajana and Gboko and N2,510 in Ibese, inclusive of VAT.

The clarification was made because of recent reports that the company sells cement in Nigeria at significantly higher prices relative to other countries, particularly Ghana and Zambia.

Newsflash Nigeria had reported that  Dangote Cement Group sells its product in Southern African country, Zambia, for at most 110 Kwacha which equals to about N1, 800 in Nigeria, while the same product sells for not less than N3, 500 in Nigeria.

Dangote Cement Group has offered explanations on the difference in prices in both countries, saying it cannot control the prices of its product when it gets to the market.

Dangote’s Group Executive Director, Strategy, Portfolio Development & Capital Projects, Devakumar Edwin, revealed that, while a bag of Cement sells for an equivalent of $5.1, including VAT in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes.

He said though the company has direct control over its ex-factory prices, it cannot control cement’s ultimate price when it gets to the market. He advised that it is essential to distinguish Dangote’s ex-factory prices from prices at which retailers sell cement in the market, DailyNigerian reports.

He, therefore, frowned on misinformation that Dangote sells its cement at higher prices in Nigeria relative to other African countries at the expense of Nigerians.

He described the allegation as false, misleading, and unfounded while giving the media persons present at the press conference copies of invoices from Nigeria and some other African countries (Cameroun, Ghana, Sierra Leone, Zambia) and urging them to conduct independent investigations on the price of cement across the West African coast.

Edwin further explained that while Dangote cement has 60% share of the market, other companies have the remaining 40%. DCP has no control over neither the prices charged by other cement manufacturers nor the prices charged by retailers in the markets.

He said, “Demand for cement has risen globally as a fallout of the COVID crisis. Nigeria is no exception, as a combination of monetary policy changes and low returns from the capital market has resulted in a significant increase in construction activity.

“To ensure that we meet local demand, we decided to suspend exports from our recently commissioned export terminals, thereby foregoing dollar earnings. We also had to reactivate our 4.5m ton capacity Gboko Plant which was closed four years ago, and run it at a higher cost, all in a bid to guarantee that we meet demand and keep the price of Cement within control in the country.”

 “Over the past 15 months, our production costs have gone up significantly. About 50% of our expenses are linked to USD, so the cost of critical components like gas, gypsum, bags, and spare parts; has increased significantly due to the devaluation of the Naira and VAT increase. Despite this, DCP has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly. We have only adjusted our transport rates to account for higher diesel costs, spare parts, tyres, and truck replacement.

“Still, we charge our customers only N300 – 350 per bag for deliveries within a 1,200km radius. We have been responsible enough not to even attempt to cash in on the recent rise in demand to increase prices so far,” he said.

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