Africa’s richest man has trained his sights on the cement market of Kenya by importing product from Ethiopia to undercut competitors before opening a local plant in 2019.
Nigeria’s Dangote Cement, owned by Aliko Dangote (pictured), wants to drive down cement prices in Kenya.
In its latest trading update Dangote said the cement exported to Kenya is priced at about $74 (Sh7,400) per tonne, making it up to 40% cheaper than locally manufactured brands, reports The Daily Nation.
Dangote hopes to topple LafargeHolcim as the largest producer of cement in Africa, and will try and use economies of scale to reset market prices to its advantage. Its plant in Ethiopia has an annual production capacity of 2.5 million tonnes.
Importing cement into Kenya is seen as Dangote’s short-term market entry plan as it prepares to establish a local plant in 2019.
The conglomerate pursued the same strategy in Tanzania this year after completing its factory in Mtwara, undercutting its competitors on price by more than 20%.
Rival firm ARM Cement said cement prices in Tanzania fell by a third in the half year ended June as a result of Dangote’s entry, reports The Daily Nation.
Dangote boasted of its success in the trading update. "We estimate that in June we achieved 23% market share across Tanzania and were the leading supplier of cement in the key market of Dar es Salaam," it said.
Image: Aliko Dangote, President and Chief Executive Officer, Dangote Group, Nigeria (World Economic Forum/Wikimedia Commons)
The company will be a game changer in the construction industry in the economy. As a strategist I believe the company will command an extensive market share, especially by using price as an entry strategy and will be able to sustain the competition.
It sounds the best offer to consumer and economically boost if it works to community level
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