In a significant development for Nigeria's cement industry, Holcim, a leading Swiss cement manufacturer, has announced its exit from the Nigerian market, citing unfavorable economic conditions under President Bola Tinubu's administration. The company has sold an 84% stake in Lafarge Africa to China's Huaxin Cement for approximately $1 billion. This deal is expected to close by 2025, pending regulatory approvals. Holcim's decision reflects a strategic shift as it aims to focus on high-growth regions, particularly in North America, where it reported a recurring operating profit of 1.67 billion Swiss francs ($1.90 billion) for the third quarter of 2024. [2a067eee]
This exit is part of a broader trend of foreign companies reevaluating their investments in Nigeria. Earlier in 2024, other major firms, including Microsoft Nigeria and Total Energies Nigeria, also withdrew from the Nigerian market, raising concerns about the country's economic stability and investment climate. [2a067eee]
The departure of Holcim comes at a time when the Nigerian cement market is experiencing significant changes, including rising prices and supply challenges. The Nigerian House of Representatives has recently invited cement manufacturers, including Dangote Cement, to discuss the surge in cement prices, which have increased by about 50%. This price hike has substantially affected the cost of building materials and rents across the country. [8280fa58]
In response to the rising costs, the National Chairman of the Cement Producersā Association of Nigeria, David Iweta, has expressed readiness to collaborate with the government to reduce cement prices within 30 days. He attributed the price increases to a mismatch between supply and demand and called for a revisit of previous policies that allowed for the importation of cement. [2d578833]
Meanwhile, the Dangote Refinery has been making strides in the local market, agreeing to supply 60 million litres of petrol weekly and recently reducing the price of Premium Motor Spirit (PMS) from N990 to N970 per litre. This price cut aims to support Nigerians as the year ends, with marketers expected to save N20 per litre. [d3d617a3]
As the cement industry grapples with these challenges, the exit of Holcim raises questions about the future of foreign investment in Nigeria's economy. The government is under pressure to create a more favorable business environment to retain existing investors and attract new ones. [2a067eee]