Ethiopia's Cement Market

Ethiopia - Construction, Industrial manufacturing

Market Insight: Industry

Last update: Jan 29, 2023
One of Africa's top 10 cement producing countries, Ethiopia's market has significant
growth potential given current low utilisation rates.
Valued at over $2.5 billion in 2022, the East African cement market is one to watch as
the region readies itself to implement a number of infrastructure projects, from large-
scale transport facilities to housing and commercial developments. Three East African
nations feature in the continent’s top 10 cement producers, a grouping which accounts
for close to three-quarters of Africa’s production capacity. Though Kenya is the regional
leader, Ethiopia is not far behind and could become a more significant player should
capacity utilisation rise.
Key Players
With 13 companies operating 23 plants, Ethiopia’s domestic cement market is led by a
mix of international and local players, of which Derba Midroc Cement, Dangote,
Mugher Cement, Messebo Cement, Habesha Cement and National Cement (parent
company East African Holding), are the largest. Production is concentrated in and
around Addis Ababa, which is home to over 40% of plants, with the remainder spread
among five of Ethiopia’s 11 regions.
Market dynamics
Ethiopia’s cement sector has seen increased investment since 2020, after the government
lifted a ban on FDI in the local cement industry. As in other parts of Africa, cement
producers in Ethiopia struggle to meet the significant gap between supply and demand;
as of 2021, the country was 5.5 million tonnes short of domestic demand. In late
December 2022, the government announced it would be setting prices in an attempt to
regulate industry’s supply and demand.
Efficiency is also a challenge for domestic cement manufacturers, which produce less
than half of the installed capacity in a given year. Total production was approximately
7.7 million tonnes per annum (Mt/a) during the 2020/21 fiscal year, despite 19.7 Mt/a
of combined capacity. Conflict in the Tigray region has also affected production,
particularly through the closure of the Messebo Cement Factory. Across Ethiopia,
producers also face challenges such as limited access to machinery spare parts, forex,
and electricity, which further restrict cement production and contribute to Ethiopia's
low cement capacity utilisation rate.
Recent Deals
Despite these challenges, cement producers continue to add capacity to existing plants
and construct new ones. Recent expansion investments include a $282 million upgrade
and 2.5 Mt/a capacity expansion to Midroc Ethiopia Plc Derba cement plant in Oromia,
while Mugher Cement is aiming to increase its market share by boosting production.
Pan-African player Dangote has announced it is finalising feasibility studies to expand
its existing facilities, while a joint venture between East African Holding (National
Cement) and West China Cement are conducting feasibility studies to increase capacity
by 30% at existing Dire Dawa plant, and have also announced the construction of a
10,000-Mt/day plant in Lemi, Amhara Region.
Ethio Cement (ETEM) and the Wacem group have announced the construction of an
integrated plant with 0.77-Mta capacity, while National Cement seeks to establish a $2.5
billion cement plant. Individual investors are also active in this sector, where investor
Getu Gelete Purchased a 40% stake in Habesha Cement in early 2022 and Ethiopian
investor Worku Ayetenew has announced plans to build a $1 billion cement plant with
a production capacity of 12,000 Mt/day.