Dangote Breaks Down Why Cement Is Expensive in Nigeria

Cement remains one of the most important inputs in Nigeria’s housing and construction sector, yet it is also one of the most controversial. Despite Nigeria being one of Africa’s largest cement producers, local prices continue to sit well above what many consumers expect, especially when compared with prices in export markets.

Recent remarks by Aliko Dangote have reignited this conversation, offering insight into why cement produced in Nigeria can sometimes be cheaper outside the country than within it.

Taxes and Levies Drive Up Local Prices

A key explanation lies in how Nigeria’s tax and regulatory system treats locally sold products compared with exports. Cement sold within Nigeria attracts multiple layers of charges, including corporate income tax, sector-specific levies, value-added tax, and withholding tax. Each of these adds incremental cost to the final price paid by builders and households.

By contrast, cement exported from Nigeria often benefits from exemptions and incentives designed to encourage foreign exchange earnings. When these taxes and levies are removed from the equation, the same product can be priced more competitively abroad, even after accounting for logistics.

The result is a structural imbalance where Nigerian consumers effectively bear costs that export buyers do not.

Domestic Buyers Carry Structural Inefficiencies

Beyond taxes, local cement prices also reflect broader inefficiencies within the domestic economy. Power generation remains expensive and unreliable, forcing manufacturers to rely heavily on alternative energy sources. Transportation costs are elevated due to road conditions, fuel prices, and logistics bottlenecks. Financing costs are also high, with interest rates and inflation pushing up the cost of capital.

While manufacturers continue to invest in capacity and efficiency, many of these macroeconomic pressures are outside their direct control. Over time, these costs are passed through the supply chain, ultimately landing on developers, contractors, and homebuyers.

Implications for Housing Affordability

The impact on Nigeria’s housing market is significant. Cement is a foundational material for residential construction, from single-family homes to large estate developments. When cement prices remain high, overall construction costs rise, squeezing developer margins and pushing sale prices further out of reach for many households.

This dynamic disproportionately affects affordable and middle-income housing, where material costs make up a larger share of total project expenses. In practical terms, higher cement prices mean fewer housing units delivered at accessible price points and slower progress in closing Nigeria’s housing deficit.

A Policy Question, Not Just an Industry Issue

The debate around cement pricing highlights a broader policy challenge. Nigeria’s industrial strategy encourages local manufacturing, yet the cost structure for domestic sales often undermines affordability for local consumers. Without reforms that balance revenue generation with housing and infrastructure priorities, these tensions are likely to persist.

Reducing duplicative levies, improving energy and transport infrastructure, and creating targeted incentives for locally sold building materials could ease pressure on prices without discouraging investment.

Why This Conversation Matters Now

As Nigeria pushes to scale housing delivery, infrastructure investment, and urban development, input costs like cement will play a defining role. Understanding why prices behave the way they do is essential for policymakers, developers, and buyers alike.

The issue is not simply about profit margins or production capacity. It is about how structural costs, taxes, and economic inefficiencies shape the affordability of shelter for millions of Nigerians. Until those underlying factors are addressed, cement prices will remain a central pressure point in the housing market.