In Rwanda and other landlocked East African countries, producers are fighting for survival and consumers will continue to pay more for cement, despite a 10% drop in global prices .
The small market and high operating costs force cement enterprises to maintain their operations through high prices. Cement producers in landlocked East Africa-Uganda and Rwanda-are less competitive. Rwanda spends an average of $4,990 to import 20-foot containers of raw materials, while Tanzania and Kenya spend less. This explains why cement shipped from Tanzania to Rwanda still has a competitive advantage in Kigali. The price comparison shows that the price of Simba cement produced in Tanzania is 110 US dollars per ton, Twiga is 100 US dollars per ton, and Kilimanjaro is 100 US dollars per ton. Uganda's Hima cement costs $177 per tonne, while Rwanda's Cimerwa cement costs $178 per tonne.
& emsp; & emsp; "Price is a factor in logistics and operating costs.". On the African continent, the biggest challenge is the distance from the cement source to the market, said Njombo Lekula, international business director of Pretoria Portland Cement. Uganda's Tororo Cement Industries, for example, has a factory in Tororo, and its limestone comes from Karamoja and is destined for Kampala, the largest consumer market.
Similarly, Cimerwa, a Rwandan cement manufacturer, is located 450 kilometres from Kigali, the largest market for cement consumption.
Cement producers also cite the cost of energy, which is a factor in the final output of cement. "For each bag of cement, energy costs account for 40% of the total cost," said Dr Ivan Twagirashema, director of Cimerwa. He further added that the region must find ways to cut production costs.
Experts said that the cement industry is a capital-intensive industry, and industry profits depend on revenue. "From a policy perspective, the region should protect the local market from cheap cement imports," said Patrick Mugenyi, general manager of Hima Cement.
At present, the global cement market is experiencing a surge in production, while demand remains relatively flat. "Overall, new capacity has surged, while demand has grown slowly and even declined in some areas.". As a result, the supply-demand balance is deteriorating and price pressures are high in some markets, said Imran Akran, chief executive of IA Cement Ltd.
But James Musoni, Rwanda's Minister of Infrastructure, said that the huge development potential in the region, the growth of commercial projects, residential development and sustained government infrastructure investment, provided a strong demand guarantee for the cement industry.
At the just-concluded 8th African Cement Summit, statistics showed that Nigeria remained the largest cement consumer in sub-Saharan Africa, consuming 18.3 million tons in 2013, followed by South Africa, consuming 12.2 million tons annually. Together, these two countries account for 50% of total cement consumption in sub-Saharan Africa.
Over the past decade, cement consumption in East Africa has grown at an average annual rate of 14%, and is expected to grow at a rate of 8% in the short term, with cement production capacity expected to reach 14.4 million tons by 2017.
At present, cement from India, Pakistan and China has flooded the whole East African market. The growth of imported cement from Asian countries poses the greatest challenge to the cement industry in East Africa, particularly in Tanzania, where producers estimate that 300,000 tons of cheap cement hit the domestic market in various ways each year.
Kenya's cement market is closely linked to Uganda and Tanzania, and several producers have production lines in more than two countries, so the actual geographical area of the cement market is wider.
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