Concrete Dreaming

Inside the mind of a cement billionaire

We’ve been writing quite a bit about cement here on 1914 Reader lately with Concrete Dreams and also here and here. The general point we’ve been making is that Nigeria is stuck on cement - the most basic level of industrialisation - and is unable to move on to the next stage of economic development which requires technological upgrading.

In that context, the video below with one of Nigeria’s cement dollar billionaires, Abdul Samad Rabiu is rather interesting.

The background to this is that the new Minister of Works, Sam Umahi, trained his sights directly on the cost of cement as an impediment to him doing his job properly:

“I’m going to be running figures with them (cement manufacturers) to check the cost of cement if we import it and the cost they are giving us here,” he said.

“A lot of contractors have complained that it is cheaper to import, but we are not allowed to import cement because we have to help the cement industries, but they also have to be reasonable with us if we are going to be patronising them.

In response to this, Dollar Billionaire Rabiu robustly defended his position by saying imported cement cannot be cheaper. Leave aside that he is promising to reduce prices ‘to help the government’ and only after a complaint by the minister. Pause and consider what he is really saying - you can produce cement all the way in say China, using higher cost Chinese labour, add a profit margin, put it on a ship for days or weeks to Nigeria and by the time it gets to the country, it will still be the same price as something made locally in Nigeria using Nigerian raw materials.

As I’ve often said - only one thing can be true; either the cost of production in Nigeria is very high or it is more profitable to manufacture in Nigeria. Both of them cannot be true at the same time. We can answer the question fairly easily from BUA’s most recent accounts:

You will struggle to find any major cement manufacturer in the world with margins as large as these. A quick check on the largest cement company in the world, the Chinese manufacturer Anhui Conch, shows that its EBITDA margins for the comparable 2022 period were 14.3%.

Nigeria has produced cement billionaires. But it is now stuck in gear 1 and cannot move forward. It has been quite the price to pay.