Wednesday, April 4, 2012

TANZANIA: Cement industry offers big promise



The increasing demand for cement in the East African economic bloc could attract up to Sh320 billion ($200 million) in investment in the next two years, according to industry players. 

Forecasts by the Tanga Cement Company Limited (TCC) show that cement consumption in the region would hit 17 million tonnes by the year 2014, in order to cater for increasing the demand caused by infrastructure development.

As governments keep earning more from natural resources coupled with the desire to put up world-class state of the art structures and infrastructure, they are expected to spend more in the cement sector. 

Statistics show that currently the region produces close to a total of 11 million tonnes against the consumption capacity of 8 million. 

TCC managing director Erik Westerberg told The Citizen this week, that the increasing demand for better houses in the country was an additional catalyst for cement consumption.

“The country’s cement industry has outpaced the growth rates of other sectors in Tanzania on the backdrop of such factors as rising demand from the housing sector, increased activity in infrastructure and construction recovery,” Mr Westerberg said.

He said the trend provided good opportunities for investors to direct their money in the sector, however, he cautioned that a conducive environment must be put in place.

Mr Charles Shonayi, a research analyst at the South Africa-based Frost and Sullivan, said growing urbanisation in East Africa would also increase the demand for cement, adding that infrastructure development and new housing were still very significant.“Cement manufacturers in East Africa should consider investing in energy-efficient manufacturing technologies,” he stated. 

The underdeveloped mortgage sector in EAC indicates that demand for new housing was likely to accelerate in the coming years as a result of rising disposable income and improved access to credit, which would have more people moving to better and larger housing.

Kenya is the largest market for cement in East Africa with an annual production of 53 per cent of the region’s total capacity. Tanzania and Uganda contribute 30 per cent and 15 per cent respectively.

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