Home Business Nigeria: Vetiva Predicts Bright Prospects for Cement Sector

Nigeria: Vetiva Predicts Bright Prospects for Cement Sector

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Vetiva Research has predicted increased optimism for the cement sector in Nigeria, underpinned by stronger capital disbursements from the public sector.

Vetiva noted that the increased focus of the federal government on transport infrastructure projects was a key driver for its expectation, with the aim to position the transport sector ahead of the recently launched African Continental Free Trade Area (AfCFTA).

Although it stated that capital expenditure (capex) execution could be threatened by a high budget deficit (N5 trillion), it remained optimistic that the government would obtain adequate financing to meet a sizeable portion of the funds through debt financing.

However, beyond the public sector, Vetiva Research also highlighted the continued reopening of the broader economy as well as the mini renaissance in the Real Estate sector as critical support factors for cement demand in 2021.

“Notably, after six quarters of contraction, the real estate sector gross domestic product (GDP) expanded in the last two quarters, driven by larger investments in the residential market,” Vetiva stated.

Overall, the investment bank projects an 11 per cent growth in domestic cement sales in 2021, taking overall cement demand to 29.1 million MT in Nigeria.

The report forecasts a mild drop in cement prices in the second half of 2021 due to an expected increase in product supply and a potential re-launch of marketing campaigns such as Dangote Cement’s “Bag of Goodies” promotions.