Cement maker Dangote slashes prices

Dar es Salaam. In a move that will rekindle competition among cement producers, Dangote Cement announced yesterday that it was slashing prices of the essential construction product so as to raise its market share in the country.

This comes at a time when some producers are already reporting reduced sales volumes as competition bites.

Until 2011, Tanzania was home to three cement manufacturers. They included Twiga, Simba and Mbeya Cement which has a market name of Tembo. However, three more manufacturers have started producing the product during the past four years. They include Athi Rivers Mining’s (ARM) Rhino cement and Dangote Cement. ARM has two factories – one at Mkuranga in Coast Region and another one in Tanga.

With such an increased number of producers, Tanga Cement saw its net profit dropping to Sh8.2 billion - at group level – in 2015 from as high as Sh28.4 billion in 2014, largely due to increased competition which affected its sales volumes.

“The 9.9 per cent decline in sales revenue was a result of competition from new entrants into the market which put downward pressure on sales prices and volumes,” reads the firm’s financial statement, signed by its board chairman, Mr Lawrence Masha. And, in what may add insult to such injuries, the Dangote Cement Group executive director, Alhaj Sada Ladan-Baki, said in a statement yesterday that the company has pegged its Dangote 32.5 cement grade at Sh10,000 Per 50 kg bag.

Similarly, its higher 42.5 grade is to sell for Sh10,500 per bag delivered in Dar es Salaam.

“This step makes cement more affordable than it has ever been in Tanzania. The new prices represent more than 20 per cent discount on the prevailing market price of the product, which currently sells for Sh13,000 in Dar es Salaam and higher prices across the country irrespective of the grade,” the statement reads. Sada said the move was in line with the company’s commitment to the dire need for development of infrastructure and to boost the effort to reduce a serious shortage of decent houses in Tanzania that is currently estimated at three million units.

The move has also come at a time when the government plans to inject the lion’s share of its development budget on improving infrastructure.

“We recognize the need for a dramatic increase in the response to the huge infrastructure and housing deficit in the country and one of the ways of addressing the issue is bringing the price of building materials down to much more affordable levels, especially cement which is within our own control,” he said.