Nigerian Buyers Subsidizing Dangote Cement’s Pan-Africa Losses of N24.37 Billion amidst Push for Price Cuts

Financial Support to Pan-Africa Operations Hits N217.4 Billion; Dangote Cement’s Nigerian Operations Remain Profitable with N1.18 Trillion Profit

Nigerian cement buyers are effectively subsidizing the loss-making Pan-Africa operations of Dangote Cement Group, raising questions about the high cement prices in Nigeria, which the government has struggled to reduce. This issue was flagged by KPMG in the audit of Dangote Cement’s Full Year 2024 financial statement.

KPMG’s report highlighted that several of Dangote Cement’s subsidiaries, particularly in its Pan-Africa operations, are currently loss-making and reliant on significant financial support from the parent company. The firm provided N217.4 billion in assistance during 2024, a sharp increase of 79.5% from N121.1 billion in 2023. The funds were directed towards capital development and operational expenses, and were either transferred to the subsidiaries directly or used to settle vendor commitments.

While the Pan-Africa operations faced a combined loss of N24.37 billion, Dangote Cement’s Nigerian operations performed strongly, posting a profit after tax of N1.184 trillion. This contrast in performance is reflected in Dangote Cement’s EBITDA margins, with Nigerian operations achieving a robust 49.5% margin, compared to just 23.3% for the Pan-Africa segment.

Moreover, the Pan-Africa operations incurred substantial finance costs, totaling N279 billion, while the Nigerian segment benefited from a finance gain of N357.9 billion, marking a stark difference in financial health between the two regions.

Government Calls for Cement Price Reduction Amid Economic Stabilization

Amid these financial challenges, the Nigerian government has called for a reduction in cement prices. Minister of Works, Sen. Engr. Nweze David Umahi, urged manufacturers to lower the cost of cement to N7,000 per bag, citing favorable economic conditions such as the stabilization of the naira and a reduction in petrol prices. Umahi criticized the current price of N9,500 per bag, noting that cement manufacturers raised prices when the dollar was nearing N2,000, yet have not adjusted them downwards despite the naira’s stabilization at around N1,400 to the dollar.

Dangote Cement’s $400 Million Investment to Boost Pan-Africa Capacity

Despite the financial challenges in its Pan-Africa operations, Dangote Cement is moving forward with expansion plans across the continent. Aliko Dangote, the richest man in Africa, recently announced a $400 million investment aimed at revitalizing a second production line at the Mugher cement plant in Ethiopia. This investment will double the plant’s capacity to 5 million tons annually. The plant, operational since 2015, has faced challenges due to regional instability and violence, which have led to the vandalism of vehicles and machinery by protesters. However, Dangote is determined to overcome these setbacks and continue expanding the company’s footprint in Africa.

With this combination of ongoing support for loss-making subsidiaries, calls for price reductions in Nigeria, and further investments in Pan-Africa, Dangote Cement is navigating a complex landscape as it aims to balance strong performance in Nigeria with growth across the continent.