By 2019, the cement industry in Uganda had grown by leaps and bounds, with indicators of increase in production. However, while the increased production was good news there was worry of decline in prices due to surplus amidst low demand. At that time international cement makers Lafarge Group’s Hima Cement was planning to switch on its new production in Tororo. The factory had capacity of producing one million tonnes, which would increasing its overall cement production in the country to 1.8million tonnes every year.
Another cement maker, Tororo Cement, also expanded production capacity from 1.9million tonnes to three million tonnes per year, while Kenya’s National Cement pumped $185million on a new one million tonne per annum plant in the same locality of Tororo in Eastern Uganda. Two years earlier, Kampala Cement had started production at its plant at Namataba, along Jinja-Kampala highway with the capacity of one million tonnes per annum.
Put together, the production capacity of cement in Uganda was projected to rise from 3.6million tonnes to 6.8 million tonnes per year. But with demand stagnant at 2.4million tonnes per annum.
Sector players were however not worried, rather they anticipated rising demand, stimulated by growth in the construction industry as government rolled out various infrastructural projects including those in the oil and gas sector. This is what informed their expansion in capacity.
“Looking at the projection, we are going to have a construction boom once investments in the oil industry start and the subsequent oil flows. Towns are going to sprout up and more structures will be constructed,” said, Allan Ssemakula, the chief commercial director at Hima Cement was quoted as saying by the Independent in 2019.
At that time also, producers anticipated increased demand for the products in the region especially South Sudan, western Kenya, Rwanda and eastern Democratic Republic of Congo.
According to Data from Uganda Bureau of Statistics, Uganda’s cement export earnings grew from US$94million (Shs337.9bn) in 2011 to US$106.8million (Shs383bn) in 2012, with majority of the products destined to South Sudan and the eastern Democratic Republic of Congo but dropped to as low as US$60.8millions in 2016 due to conflicts in the two countries. At the time also, cement prices in Uganda had dropped from Shs33,000 in 2016 to as low as Shs28,000 per 50-kg bag, a 15% drop occasioned by competition in the industry.
However predictions of low prices due to competition and surpluses have been overturned with government interventions. The return of relative peace in South Sudan has boosted the demand for cement. The government in the world’s youngest nation has embarked on major infrastructural projects, providing a market for Uganda. February 2022 Statistics from the Bank of Uganda indicate that Uganda earned $27.6 million from cement exports to South Sudan this financial year.
The admission of the Democratic Republic of Congo to the East African Community has also seen a rise in projections for the cement industry in Uganda. Congo adds more than 90 million people to 177 million East Africans. In the region, Uganda is the second largest exporter to Congo, after Rwanda. In January, trade between Uganda and the DRC hit an all-time high, as new markets for Kampala’s goods opened up. According to January 2022 data from the Bank of Uganda, Kampala’s exports to DRC were $74.3 million that month, up from $29.9 million in December 2021, representing considerable growth. Uganda’s main exports to DRC include cement, palm oil, rice, sugar, refined petroleum, baked goods, cosmetics and iron materials.
Recently, the government of Uganda also launched an initiative dubbed the export promotion strategy, to expand the market and export base of specific agricultural and industrial products. Under the strategy 10 major areas, were identified including coffee, grains, fish, beef, dairy, tourism, cement, steel and fruits and vegetables to drive the agenda.
According to Mr Odrek Rwabwogo, the senior presidential adviser on special duties, the exporters of agricultural and industrial products have agreed on a unified approach with that of government, narrowing down to seven key products namely, fish, coffee, steel, cement, beef, dairy, and fruits/vegetables.
