From ETB 2,900 to 1,500: How Lemi National Cement is Transforming Ethiopia’s Cement Market

When the Ethiopian government lifted the ban on foreign direct investment (FDI) in 2020, it was a clear step toward realizing its vision of industrial growth and self-reliance. This move has given a boost to the cement sector, which has become a vital part of Ethiopia’s rapid urbanization and ambitious infrastructure projects. From roads to housing and industrial parks, cement is at the heart of the country’s transformation. 

Yet, the journey hasn’t been without hurdles. Supply shortages, price hikes, and a heavy reliance on imports have made cement costly and out of reach for smaller projects, leaving many to wonder how long these challenges will persist. While the government continues to prioritize industrialization, the market remains concentrated in the hands of a few major players, struggling to keep up with soaring demand.

“The government’s focus on industrialization, coupled with large-scale construction projects, has significantly driven up the demand for cement,” said Biru Wolde, the group CEO of East African Holdings. “This provides an excellent opportunity for manufacturers like our Lemi National Cement to grow and contribute to Ethiopia’s economic transformation.” He highlighted that the industry enjoys several competitive advantages, including Ethiopia’s abundance of raw materials, such as limestone, which enables cost-effective production. Additionally, the booming construction sector and Ethiopia’s strategic location in East Africa open doors for both domestic and export markets.

However, Biru acknowledged the challenges that manufacturers face. High energy costs, inconsistent coal supply, intermittent power outages, and logistical inefficiencies remain major hurdles. Currency fluctuations and reliance on imported equipment further intensify financial pressures, demanding innovative strategies to overcome these barriers.

The recent shift to a market-based foreign currency system has added another layer of complexity, impacting businesses across the board, including the cement industry. Prices and supply chains are feeling the effects, prompting the government to introduce market-based cement pricing. This move allows manufacturers to set their own distribution prices, aiming to stabilize the sector.

Adding a new twist to the market, Lemi National Cement Factory, the largest cement production facility in Ethiopia, has officially entered the scene. Many are now watching closely to see how this new player will influence cement supply and pricing, with expectations that it will bring significant changes to the market dynamics.

It has a daily production capacity of 10,000 tons of clinker, translating to 15,000 tons of cement per day. “Our facility is designed to meet Ethiopia’s growing demand for high-quality cement. This scale of production ensures a consistent and reliable supply, contributing significantly to our country’s and the region’s construction and infrastructure aspirations.” said Biru.

Lemi National Cement is redefining the dynamics of Ethiopia’s cement market by increasing the national supply by 50%. Combined with the Dire Dawa plant, which produces 3,500 tons of clinker daily. This scale of production not only addresses current demand but also enables the factory to support Ethiopia’s ambitious infrastructure and industrialization projects.

Cement production in Ethiopia remains an expensive endeavor, with manufacturers grappling with rising energy costs, unreliable coal supplies, and the burden of importing costly machinery. These challenges ripple through the market, pushing up prices and making cement less affordable for everyday construction projects. Retailers also point to ongoing supply shortages, price fluctuations, and logistical challenges as major issues impacting the cement market.

“We are optimizing operations by adopting green energy through PanAfrique Green Energy, reducing reliance on coal and cutting costs,” said Biru Wolde. “This shift also aligns with our commitment to sustainability by lowering carbon emissions.”

Biru noted that cement prices in Addis Ababa, previously ranging between ETB 2,000 and ETB 2,900, have now stabilized at around ETB 1,500. He attributed this change to the company’s strategy of supplying large quantities directly to retailers and implementing a post-purchase management system to ensure benefits reach consumers, fostering a fairer market.

Lemi National Cement is investing in cutting-edge technology to boost productivity, reduce waste, and maintain consistent product quality. By automating processes and using advanced equipment, the factory achieves high efficiency while keeping costs in check. The company also prioritizes workforce development, ensuring skilled professionals drive operational success. This is reflected in the engineers sent to China for training before the plant became operational. “These efforts strengthen Lemi National Cement’s competitiveness, support Ethiopia’s industrial growth, and ensure the delivery of top-quality products,” he added.

Economic theory suggests that when demand outpaces supply, prices naturally rise. This has been clearly evident in the Ethiopian cement market, where high demand and limited supply have driven up prices. One of the key expectations surrounding Lemi National Cement is that its entry into the market will help reduce prices by increasing supply and competition.

“To bolster our capacity and contribute to Ethiopia’s future growth, we plan to add another production line with similar capacity. This expansion will double our output, enabling us to better meet the nation’s growing demands. With a strong focus on quality and innovation, this strategic move reinforces Lemi National Cement’s role as a key player in Ethiopia’s development goals,” said Biru.

According to the Group CEO, Lemi National Cement is playing a crucial role in stabilizing cement prices in Ethiopia by ensuring a consistent and reliable supply of high-quality cement. “We are already seeing the positive impact, as there has been noticeable price stability recently,” he said. By maintaining a steady flow of quality cement, the company helps reduce price fluctuations, bringing more predictability to the market.