Weak competition and market concentration, rather than high production costs, are the main drivers of persistently high cement prices in Nigeria, according to Agora Policy, a Nigerian think tank.
In a new policy insight titled Market Power and Failure of Competition Policy in Nigeria’s Cement Industry, the organisation said Nigeria’s cement market structure is allowing dominant producers to sustain high prices despite surplus production capacity.
Agora Policy noted that Nigeria achieved self-sufficiency in cement production as far back as 2012 and now has installed capacity well above domestic demand. However, prices have remained elevated, resulting in unusually high profit margins for the three dominant producers — Dangote Cement, Lafarge Africa and BUA Cement.
According to the report, average operating profit margins in the cement industry stood at about 49 per cent as of September 2025, up from around 30 per cent in 2024. These margins, it said, are significantly higher than those recorded in North America, Europe, Asia and most of sub-Saharan Africa.
The think tank argued that the combination of excess capacity, high prices and strong profitability suggests that pricing outcomes are shaped more by market power than by cost pressures.
“Nigeria has built the capacity it set out to build, but the benefits of that achievement have yet to fully reflect in prices paid by households, builders and government,” the report said.
While cement producers often blame high prices on taxes, energy costs, transport bottlenecks and financing challenges, Agora Policy questioned why Nigerian firms are able to sell cement profitably at lower prices in export markets.
“If costs are the binding constraint, why can Nigerian producers sell cement abroad at lower prices than Nigerians pay at home?” the report asked, adding that the gap points to the influence of market structure and pricing power.
The organisation traced the current market concentration to import-substitution policies introduced in the late 1990s and early 2000s, which offered tariff protection, tax incentives, foreign exchange support and exclusive limestone concessions. Although these measures succeeded in boosting local capacity and eliminating imports, they also entrenched a market dominated by three firms.
According to the report, excess capacity has become a strategic tool used by incumbents to deter new entrants, reinforce dominance and limit competitive pressure.
Agora Policy also observed that cement markets in Nigeria operate largely on a regional basis, allowing producers to charge higher prices in areas where logistics and transport costs restrict consumer choice.
The think tank warned that high cement prices act as a “hidden tax” on housing and infrastructure, increasing construction costs and limiting what governments can achieve with constrained budgets.
Rather than reopening cement imports, which it said would offer only temporary relief, Agora Policy called for competition-focused reforms. These include opening access to limestone deposits, addressing logistics-related barriers, tackling regional dominance and strengthening oversight by the Federal Competition and Consumer Protection Commission (FCCPC).
“Nigeria’s cement challenge is no longer about building capacity but about restoring competition,” the report said, warning that without stronger safeguards, industrial policies risk entrenching dominance at the expense of affordable housing, infrastructure development and inclusive growth.