Key factors behind sharp rise in cement use in Tanzania

Dar es Salaam. Cement production and consumption is rising steadily in Tanzania, thanks to the ongoing mega projects, growing urbanisation and a steady export market.

Latest National Bureau of Statistics (NBS) data shows that cement production, consumption and exports rose by 14.9 percent, 9.8 percent and 43.2 percent, respectively, last year.

Apart from roads and bridges – including the 3.2-kilometre Kigongo-Busisi Bridge linking Mwanza and Geita regions, as well as the ongoing construction of bus rapid transit (BRT) infrastructure along Kilwa Road in Dar es Salaam – the government is also undertaking the multi-billion-dollar standard gauge railway (SGR) and the Julius Nyerere hydropower projects.

The projects, along with development of residential and commercial buildings in major urban centres by individuals and institutions, are driving demand for cement locally.

As a result, total annual production last year was 7.59 million tonnes, an increase of 983,714 tonnes from 6,614,359 tonnes that were produced in 2021.

From January to December 2022, cement consumption increased to 7,532,173 tonnes, up from 6,863,004 tonnes in 2021, an increase of 669,168 tonnes, equivalent to 9.8 percent.

“Cement consumption is a proxy of growth in the construction activity, specifically on buildings and civil engineering works,” the NBS report says.

From economists’ point of view, cement consumption increases along with per capita income and gross domestic product (GDP) in developing countries.

Cement consumption is also reflective of economic development achieved by a country.

Last year witnessed significant inter-regional movement of cement, which plays a crucial role in regional demand-supply dynamics.

External trade data shows that cement exports in 2022 increased to 632,726 tonnes, up from 441,828 tonnes in 2021, which is an increase of 190,898 tonnes, equivalent to 43.2 percent.

“The export destinations for Tanzanian cement are mainly neighbouring countries such as Rwanda, the Democratic Republic of Congo, through the Kigoma border, Burundi, Malawi and the Comoros, among others,” Tanzania Portland Cement Plc (Twiga Cement) commercial director Yves Mataigne told The Citizen.

Twiga Cement, which is listed on the Dar es Salaam Stock Exchange (DSE), is Tanzania’s largest cement manufacturer.

“As the country grows and strategic projects are implemented, large consumption of cement is influenced, for example, by the standard gauge rail network across the country,” Mr Mataigne said.

He added that although there was a positive outlook in the Tanzanian market, the utilisation of actual production capacity had yet to be reached.

“Production capacity is estimated at close to around 12 million tonnes, but there are limiting challenges, including illegal imports.

“However, we remain resilient as the government, through the Investment, Industry and Trade Ministry, has been in close communication with manufacturers and willing to collaborate in addressing such challenges,” said.

An increase in domestic production of cement also slowed the importation of the commodity from outside markets.

Data shows that during the period under review, imports decreased to 566,826 tonnes from 690,474 tonnes in 2021, which represented a drop of 17.9 percent.

A finance and investment expert from the University of Dar es Salaam (UDSM), Dr Tobias Swai, said as a developing country whose economy is currently on the upswing, the construction sector is a crucial factor.

He added that demand for cement was likely to remain high since there were numerous other mega projects in the pipeline.

“However, it is important to evaluate how much is consumed locally because available data shows that as production grows, so do exports. We should therefore make sure that the bulk of the additional cement produced is consumed locally,” Dr Swai said.

An economist from Mzumbe University, Dr Daudi Ndaki, said the government’s focus on infrastructure development under President Samia Suluhu Hassan and her predecessor, the late John Magufuli, had played a key role in the current trend.

“When you focus on infrastructure and the construction sector, the impact is felt across all related industries, including the manufacture of cement and other construction materials,” he said.

According to the Bank of Tanzania (BoT), the construction industry was among the key sectors that drove economic growth in Tanzania Mainland.

The central bank said in its 2022 mid-year review that Tanzania Mainland economic growth averaged 5.2 percent, higher than the annual projection of 4.7 percent.

The growth was mostly driven by agriculture (15.6 percent), construction (11.8 percent), and manufacturing activities (8.1 percent).