East Africa: keeping the lights on

East Africa: keeping the lights on

With overcapacity and pricing pressures weighing in on the east African cement industry, cement producers are setting their sights on the return of strong demand by 2023. In the meantime, will they prepare by taking up a stronger position, possibly through industry consolidation? By Standard Investment Bank, Kenya. The Tanzanian cement industry is expected to see an improving landscape from 2021 The East African Community (EAC) recorded real GDP growth of 5.9 per cent in 2019, slower than the 6.6 per cent growth in 2018, with the deceleration cutting across most member countries. GDP growth in Uganda was 4.9 per cent in 2019 compared to 6.1 per cent in 2018, while Tanzania’s was 6.3 per cent compared to seven per cent in 2018. Burundi recorded an improvement from 1.6 per cent in 2018 to 1.8 per cent in 2019. Rwanda recorded the highest GDP growth rate of 10.1 per cent, supported by both the private and public sector. Kenya’s GDP growth is estimated at 5.4 per cent in 2019 compared to 6.3 per cent in 2018, with growth more pronounced in service-oriented sectors.

The construction sector in Kenya, which makes up 5.6 per cent of GDP, registered a growth of 6.4 per cent in 2019, lower than the 6.9 per cent in 2018 – recording slower growth for the fourth year running due to the slowdown in infrastructure development. However, the real estate sector grew by 5.3 per cent, an improvement from the 4.1 per cent growth in 2018. Cement sector: keeping the lights on

EAC member states are generally experiencing similar trends in the cement sector, grappling with overcapacity, pricing pressures and weakening demand. Rwanda is somewhat of an exception with sufficient demand and one operational cement manufacturer, CIMERWA, while Tanzania saw a recovery from 2019. The region seems to be on a downward trend in the cyclical nature of the sector, with hopes for a recovery in demand within the next three years. Adding fuel to the fire is the COVID-19 pandemic that is limiting economic activity, consequently repressing cement demand and production, as well as hampering the importation of production inputs. Kenya

In Kenya cement consumption declined by 1.3 per cent in 2019 to 5.8Mt while production decreased by 2.3 per cent, shrinking for the third-consecutive year to record the lowest output in five years. The weak demand is a result of the slowdown in construction and […]

Stay in the Know!

Sign up for the latest news and information on African Companies and Economy.

By signing up, you agree to receive MoneyInAfrica offers, promotions and other commercial messages. You may unsubscribe at any time.

Leave a Reply

*