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Published On: Sun, Sep 24th, 2017

Cement: Distributors, consumers explain Dangote’s dominance

 

EMEKA EJERE

As Nigeria continues to grow in the area of real estate, one item that is increasingly favoured is cement, given its indispensability in building construction from the foundation to the finishing.

But among the cement brands, BusinessHallmark’s investigations revealed that a number of factors are in favour of Dangote Cement, which explain the phenomenally high market share the brand controls in the Nigerian space.

A tour round Akute area of Ogun State, a fertile ground for investment in housing revealed that both distributors and users of cement are in love with Dangote Cement for diverse reasons.

Our team amazingly discovered that all the cement shops around Akute have only Dangote Cement in display as, according to the dealers, it sells much faster than Elephant Cement.

More intriguing, however, is the discovery that while most of the respondents were in agreement that Elephant Cement is harder and better when dried, the fact that it takes time to dry gives its rival Dangote Cement the advantage of selling faster, especially during the rainy season.

Mrs. Bola Adeboye is the secretary of Guide Me Investment, a heavy cement distributor in Akute. She said her company used to distribute both Dangote and Elephant many years ago but at a point decided to limit their business to only Dangote when it became obvious that the latter was the choice cement in the area.

“We were distributing both Dangote and Elephant before now but noticed that because of the humid nature of this area, people do not buy Elephant as it takes time to dry,” Mrs. Adeboye explained.

She, however, added that those who do not mind (though very few) still go for Elephant, which she said is stronger than Dangote.

The story is not any different at Sekoni Investment, another dealer. The proprietor, Mr. Tunde Ajayi, noted that he sells only Dangote because that is what people ask for in the area.

“We sell only Dangote because that’s what people ask for. Most of them say that is what their bricklayers or engineers recommended,” said Ajayi.

At Divine Favour Investment, Mrs. Funmi Sokefun, corroborated the views of her colleagues, observing that Dangote is synonymous to cement in Akute.

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She noted that though experience had shown that Dangote dries faster than Elephant, many buyers do not even have any reason for preferring Dangote other than the fact that it is what everybody is buying.

Our team also visited a number of block industries in Akute where findings still spoke in favour of Dangote Cement.

Mr. Emmanuel Olanrewaju, is the Managing Director of Ire Akari Block Industry. He told Business Hallmark that he uses Danote Cement because it is good and dries faster.

“Elephant is also good. In fact, it’s even better. It is the master. But the only problem is that Elephant takes time to dry,” Olanrewaju said.

When asked if buyers of block bother about the brand of cement used, Mr. Olanrewaju said, “No, there is nothing like that. All cements are good.”

Rashtona Construction Company, Akute is slightly of a different position in terms of choice of cement. It uses only Dangote during rainy season but can use either of the two brands during dry season.

A senior staff of the company, Mr. Sunday Aloba, explains: “We use Dangote because it dries faster during rainy season. But now that dry season is gradually setting in, we are beginning to also use Elephant.

A 50 kilogram bag of the cement brands goes for between N2,520 and N2,600 depending on quantity of purchase or scale of operation of the seller.

The high demand for Dangote Cement cuts across the African continent. According to the unaudited results of the company for the period spanning January to June 2017, Ethiopia is leading Africa in the consumption of cement manufactured by the Dangote Group.

The East African giant took in a total of 1.1 million metric tons of Dangote Cement with the second African country being Senegal where 0.6 million metric tons of the product was sold.

Generally, the cement producer announced a spike in its sales volume across the continent despite a drop in sales in Nigeria. The company continues expansion across the continent with plants in different countries.

Dangote Cement’s Chief Executive Officer, Onne van der Weijde is quoted to have said, ‘‘Our Pan-African operations are growing well and increasing market share. We saw our first sales from Sierra Leone in the first quarter and our new plant in the Republic of Congo will be in production at the end of July, further increasing our footprint across Africa and strengthening our position as its leading manufacturer of cement.”

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Other records of trade volumes across Africa were 0.6 million metric tons sold in Cameroon, and 0.5 million tons in Ghana. Also, 0.4 million metric tons of cement was sold in Tanzania and 0.3 million tons in Zambia.

The company explained the fall in sales volumes from Nigerian operations putting it down to onset of rains which stalled many construction projects. It fell from 8.8Mt same time last year to 6.9Mt.

“Our revenues have continued to grow despite the lower volumes seen in Nigeria, especially because of the recent heavy rains. Our margins have improved significantly, helped by improved efficiencies and a much better fuel mix in Nigeria.

“We are using much more gas and increasing our use of coal mined in Nigeria, thus reducing our need for foreign currency and supporting Nigerian jobs,” he stressed.

Dangote cement is Africa’s largest cement company with plants in Nigeria, Senegal, Ghana, Cameroon, Ethiopia, Zambia, Tanzania & South Africa.

Last week, the cement giant approached PPC Ltd. about a takeover deal, signaling the start of a possible bidding war for South Africa’s biggest cement maker after an earlier offer led by Canada’s Fairfax Financial Holdings Ltd.

Dangote Cement Plc is a Nigerian multinational publicly traded cement manufacturer headquartered in Lagos. The company is engaged in the manufacture, preparation, import, packaging, and distribution of cement and related products across the African continent.

Dangote Cement Plc was formerly known as Obajana Cement Plc and changed its name to Dangote Cement Plc in July 2010. Obajana Cement Plc was incorporated in 1992.

It is a subsidiary of Dangote Industries Limited and is the largest company traded on the Nigerian Stock Exchange. In 2013, the company produced and sold 13.3 million metric tonnes of cement, with revenues of US$2.4 billion.

As of 2014, Dangote Cement had a market capitalization of $20 billion. In 2012, Forbes Africa named Dangote Cement as one of the top five listed companies in West Africa.

 

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