Shortage of Cement in Growing Economies

Zimbabwe has been on a building spree since 2017, which has resulted in a significant increase in cement demand. Banks in Zimbabwe have been expanding their loan books to focus on property development. Cement manufacturers are operating their plants at 100% capacity to meet this demand. The country has a demand of about 1.3 million tons of cement annually and local producers have a combined capacity of producing around 1.6 million ton per year. The problem is that the plants frequently break down, so they can’t fill orders, creating a deficit of cement in the industry.

Recently the Ministry of Transport and Infrastructural Development embarked on a roads rehabilitation program, which may be affected by the cement shortage.

The Zimbabwe newspaper, The Herald, reported that two of the largest companies that supply more than 70 percent of the country’s cement market, are experiencing out-of-stocks of cement in building material warehouses and retail stores throughout the country.

Without cement, the construction industry in the country is stranded.

“A statement released by the Cement and Concrete Institute of Zimbabwe (CCIZ) yesterday indicated that the industry may not be able to cope with the rising demand, estimated at 30% year-to-date since the same period last year, unless foreign currency shortages were addressed to reduce plant downtimes,” reports The Herald.

Zimbabwe’s cement plants need to purchase parts to fix the machinery, but there are issues with foreign currency and procurement. With the shortage of cement, prices have been skyrocketing. Now a 50 kg. bag of cement costs between $15 and $20; previous prices were $11.50.

One company has been implementing various initiatives to mitigate the situation. These include exporting 2% of their production capacity to neighboring countries and local sourcing of input materials to ensure that the cement supply is not compromised.

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