Ready, get set, go regional
Cement producers are in intense competition as Cameroon becomes a growing base for companies looking to access landlocked neighbours
Cameroon’s geography and its role in the Communauté Economique et Monétaire de l’afrique Centrale (CEMAC) are benefiting the country’s cement sector. It has been attracting new commitments which could help turn the country into a sizeable exporter within the next two years. This could also be a boon for Cameroonian consumers, although the end of Lafargeholcimowned Cimencam’s monopoly a few years ago has not led to a significant drop in retail prices. Cement firms have been taking advantage of a 2013 law on private investment that includes tax and other exemptions during the set-up and operational periods. After severe cement shortages were recorded in 2008, the government has been looking to strengthen local production and diversify investors in the sector. In the past three years, three new cement plants have opened in Cameroon. Moroccan-owned Ciments d’afrique (Cimaf ) got started in early 2014, while Nigeria’s Dangote Cement began operations in April 2015 and Turkish-cameroonian joint venture Medcem followed in June 2015. All of Cameroon’s four main producers have plans to expand their production in the coming years. Cimencam, which has operated in the country since 1963, began construction of a plant with the capacity to produce 500,000tn per annum at Nomayos, outside of Yaoundé, in March of this year. Cimaf Cameroun, owned by Moroccan construction company Addoha, is set to triple its production capacity of 500,0000tn per year by 2018. Market leader Dangote Cement Cameroon is working on a new plant in Yaoundé (see interview). And finally, Turkish-backed Medcem is working on increasing the capacity of its plant from 600,000tn to 1m tonnes. Newcomer Mira Cement is also talking up its plans to build a 1m-tonne plant in Douala, where most of the other plants operate. If all of the projects come to fruition, Cameroon could be producing 9m tonnes per annum in a few years’ time and exporting to neighbouring countries such as Chad and the Central African Republic. That would be a big boost for regional trade, as the CEMAC lags behind other African regional organisations, with intra-regional trade accounting for less than 2% of total trade. Businesses have long complained that weak infrastructure and a lack of intergovernmental cooperation have held back trade between Central African countries. Cement prices are much higher in landlocked Central African countries like Chad, where a 50kg sack of cement sold for 11,000 CFA francs ($18.8) in 2016. As Cameroon has no commercial limestone mines to provide an important raw material – clinker – cement producers have to import it. And as the government is struggling to raise revenue amidst lower commodity prices and the fight against the Boko Haram Islamist militants, Yaoundé has decided to double duties on clinker imports to 10% this year.
HIGHER TAXES, HIGHER PRICES
Companies say that moves like these will keep prices higher for consumers. Cimaf chief executive Abdeladim Arnous told local media in June: “Investors in Cameroon are between a rock and a hard place. You have to pay more taxes, you have to pay more customs duties, you have to drop prices. It is an extremely complex equation.” Prices tend to fluctuate, and a 50kg sack of Cimencap CPJ35 cement was selling for 4,200 CFA francs ($7.17) in Douala in June, representing a 200 CFA franc rise on recent prices. For about a decade, the government has been looking for a developer for the limestone deposit at Mintom, in southern Cameroon. It has estimated reserves of 540m cubic metres, and the mines ministry says that the company Cageme
has the exploration rights to the property. Industry sources say that much of the limestone is covered in water, making the launch of operations complicated. If more studies show that production is feasible, it would lead to lower prices for locally produced cement. President Paul Biya’s government has gradually been pushing the development of grands projets like dams, stadiums for the 2019 Africa Cup of Nations football tournament and social housing projects, which should be a boon for the construction sector. Dangote Cement Cameroon country manager Paavo Wiro tells The Africa Report: “The country has a lot of projects but they have been very, very late because some projects have been delayed seven or 10 years. And now it is coming out progressively, so that is very good.” While the government estimates that construction will contribute 0.4% to economic growth for each of the next three years due to an uptick in activity, finding responsible companies continues to be difficult. In 2016, the public works ministry blacklisted 122 firms from bidding for government contracts for two years because of their failure to respect contractual details. Reinnier Kazé in Douala and Marshall Van Valen
Dangote Cement went from zero to 50% market share in Cameroon in just one year, with its Douala plant