Nigerian lawmakers want Dangote’s cement dominance shattered

Nigerian lawmakers have urged the government to break the dominance of the country’s three largest cement companies to encourage more competition and lower prices.

Dangote Cement Plc, which holds 61% of the market, Lafarge Africa Plc and BUA Group effectively control production in Africa’s most populous country, the Nigerian Senate said in a statement sent Tuesday evening. This makes the market “sensitive to pricing practices,” they said.

Dangote Cement is owned by Africa’s richest man, Aliko Dangote, who operates factories in 10 countries and builds the continent’s largest oil refinery in the West African country.

More government incentives such as concessional loans and larger tax cuts for new entrants could make the market more competitive, lawmakers said. This in turn could lower the cost of cement which is 240% higher in Nigeria than the world average. More locally produced cement is also needed to reduce a housing deficit of 30 million units, lawmakers said.

Lafarge Africa “is committed to operating in a free and open market,” a spokesperson for the Lagos-based producer said by phone. “We are constantly investing to meet the demand for our products in the Nigerian market where buyers have a choice.” Dangote and BUA did not immediately respond to calls for comment.

Nigeria’s new cement companies will find it difficult to compete as the cost of production is one of the highest in the world, Onyeka Ijeoma, analyst at Vetiva Capital Management, said by phone. “If there is anything the Senate can do to help open up the space, it will be to improve the ease of doing business,” he said.

– With the help of Tope Alake and Emele Onu

(Updates with Lafarge Africa comments in the fifth paragraph)

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