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Construction boom fuels cement demand in Ethiopia

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World Cement,

Construction is booming in Ethiopia because it is the most attractive investment opportunity in the country, according to an IMF representative quoted in a recent report on The government is pushing investment in infrastructure in the hopes that it will help the country achieve middle-income status by 2025. Billions of dollars of public works projects, including new roads, railways and power generation, are being carried out across the country. Meanwhile, private investors are channelling their money into real estate because there is a lack of attractive investment opportunities in other sectors.

Ethiopia has a population of 91 million people, of which about a quarter are unemployed. The construction boom has created jobs, but it hasn’t tackled the imbalance in the country’s economy, which is in urgent need of foreign exchange such as would be gained by increasing Ethiopia’s exports.

Cement industry growth

Currently, the country has insufficient cement capacity. The 2010 – 2015 Growth & Transformation Plan states as one of its aims that the contribution of industries to Ethiopia’s GDP will grow to 21.4% (up from 10%) over the Plan period, with cement production achieving a ten-fold increase from 2.7 million t up to 27 million t. So far, the industry is falling behind this goal despite making progress. Power outages are a significant problem.

Several players are entering the cement market in Ethiopia and existing producers are expanding. South Africa’s PPC and Nigeria’s Dangote Cement are both building new cement plants in the country. Habesha Cement has finally secured the financing it needs to construct a new cement plant, while Derba Midroc is reportedly planning to build two new plants in the country. It’s unlikely the cement industry will reach its GTP goals by 2015, but it is certainly on its way.

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