this blog is spored BY reflex Eco Group
VENTURES AFRICA- East Africa Portland cement has disclosed plans to venture into Tanzania by June and add a new production plant in Kenya, as it looks to expand its East African market share.
“We are looking at Northern Tanzania and have already identified a partner situated in Arusha,” said Managing Director Kepha Tande on Friday during a media briefing with the new company chairman Bill Lay.
Tande noted the stiff competition in Kenyan market amid less demand and excess supply, prompted the move. It seeking newer markets to improve sales as well as upgrading its factory equipment for increased capacity to boost business.
EAPCC has been hit hard by local competition and wrangles among shareholders, resulting in a market share decline of 13 percent. It was also forced to halt its business in South Sudan after the attempted coup in December caused chaos in that country.
Africa’s largest cement producer, Dangote Cement’s Africa-wide expansion plans may further derail EAPCC’s regional push. The Nigerian manufacturer is already constructing a $500 million cement factory at Mtwara, south-eastern Tanzania, while also disclosing plans to build a $400 million plant in Kenya that will have a daily capacity of about 5,500 tonnes.
“Going by Dangote Cement’s financial muscle and aggressiveness, an unprecedented battle could be in the offing,” said investment analysts at Old Mutual Securities in a research report last year.
Although demand for cement has increased in East African countries like Kenya, fuelled by a construction boom, Dangote’s entry into the market is expected to heighten competition and tighten sales growth.
EAPCC not only faces competition from Dangote within the region, other cement makers have expanded their operations amid increasing demand in some parts of East Africa.
ARM Cement, listed on the Nairobi Securities Exchange, recently announced it was seeking $300 million to build a factory in Kitui town – about 180km east of Nairobi, Kenya’s capital which will produce 8,000 tonnes of cement daily.
National Cement, Mombasa Cement and Savannah Cement are other companies who are pumping millions of dollars on new projects.
Despite increased competition, MD of ARM Cement, Pradeep Paunrana expressed optimism that increased production and competition wouldn’t reduce its market share.
“In Kenya and East Africa generally, our cement consumption per capita has been very low. As our economies are improving, as our aspirations of development are changing with more educated young people, we want more housing, more roads, more infrastructure… all these ultimately require a lot more cement,” Paunrana noted.
EAPCC, whose market share has reduced from 34 percent to 21 percent in three years, will hope its entry into Tanzania increases market share and grow revenue inflows.