Dangote Says Monetary Policy Changes, Low returns from Capital Market Boosted Construction Activity

Leading cement company Dangote Cement has disclosed the recent issuance of a N50 billion Series 1 fixed rate senior unsecured bond

Responding to critics decrying the high price of a bag of its cement in Nigeria compared to what it goes for in countries like Ghana and Zambia, Dangote Cement’s management has stated that its cement is cheaper in Nigeria than in the other African countries.

In a statement issued by the company, its Group Executive Director, Strategy, Portfolio Development & Capital Projects, Devakumar Edwin, shared that a bag of cement in Nigeria, including VAT, costs an equivalent of $5.1, while in Ghana, it goes for $7.2, and In Zambia $5.95.

It added that the COVID-19 pandemic stimulated a spike in the demand for cement on a global scale.

It added, “To ensure that we meet local demand, we had 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 4 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.”

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Dangote’s Production Costs

The company noted factors affecting the production of its cement citing an increment in the cost of elements critical to production like bags, gypsum, gas, and spare parts.

It said, “Over the past 15 months, our production costs have gone up significantly. About 50% of our costs are linked to USD so the cost of critical components like: gas, gypsum, bags, and spare parts; has increased significantly due to devaluation of the Naira and VAT increase.

“Despite this, Dangote Cement has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly.”

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