Cement industry faces persistent challenges
The local cement industry is facing persisting challenges that are affecting the productivity and profitability of the sector, it was learnt.
Delivering a key note address at the opening of the third annual East African Cement, Concrete and Energy Summit at the UNECA Conference Hall on Wednesday, Haile Assegide, president of the Ethiopian Cement Producers Association and CEO of Derba Cement, talked about the thriving local cement industry. Haile explained how the cement industry grew in the past years and the country transformed from being importer of cement to a net exporter of cement in few years’ time.
However, the road is not beds of roses for local cement factories. According to Haile, shortage of skilled man power, dearth of foreign currency and erratic electric power supply is hampering the productivity of the local cement factories.
Haile told The Reporter that there is no adequate number of professionals in the local cement industry. “Our engineers start training in our factories. So we are forced to cover this gap by brining experts from China, India and other countries.” The expatriates’ salary paid in foreign currency escalates the cost of the cement factories.
Haile said that the Ethiopian Cement Producers Association is closely working with the Ministry of Industry to alleviate the problem. “The ministry of Industry is trying to establish a cement technology training center and we hope to replace the expats within three years.” All the major cement factories including Derba, Dangote and National Cement are run by Chinese and Indian engineers. The Ethiopian Cement Producers Association hopes that the Adama Science and Technology University and the Addis Ababa Institute of Technology will work on cement technology education.
The other major challenge facing the local cement industry is shortage of foreign currency. All cement factories undertake over haul maintenance work every year. “We have to set up all the required spare parts before we start the maintenance work. We are facing serious challenge to find the foreign currency to import the spare parts,” Haile told The Reporter.
The Ethiopian Cement Producers Association is holding talks with the National Bank of Ethiopia to find ways that the bank could avail foreign currency to the cement producers. Haile believes that the most burning issue is the shortage of skilled man power. “If we manage to alleviate the shortage of skilled manpower the other problems could be contained.”
Frequent power supply disruption is affecting the productivity of the cement factories. “We have a dedicated power line for all cement factories. But we still have the abrupt power interruptions that damage our machineries.”
Samuel Halala, director of the Ethiopian Chemical and Construction Inputs Development Institute, proudly speaks about the achievements of the local cement industry. Samuel said that shortage of cement was one of the serious challenges the Ethiopian economy faced in implementing the first Growth and Transformation Plan (GTP). “The total cement production capacity was 2.3 million tons per annum whereas the demand was 5-6 million tons. The government took progressive steps encouraging foreign and local investors to build cement factories. Derba, Dangote, Messebo and National Cement made huge investments that stabilised the cement market,” Samuel said. The annual installed cement production capacity reached 15.1 million ton in 2017.
With regards to shortage of skilled man power Samuel said that his institute, the ministry of Industry and the Ethiopian Cement Producers Association are working together in human capital development. “There should be a knowledge transfer. The expatriates should train our engineers and technicians. We are drafting a two year program in which the expats train our engineers. The second strategy is to train professionals at Poly Technique and TEVT Colleges,” Samuel said.
Samuel said that the foreign currency shortage is not peculiar problem encountering the cement industry adding that it was a national challenge. “It is not only shortage of foreign currency but the problem is administering the available foreign currency appropriately. The foreign currency shortage is related to the political instability of the country”
Considering the political reform the Prime Minister Abiy Ahmed’s administration is implementing Samuel is optimistic that the cement producers will not face foreign currency sector in the new fiscal year.
With regards to the erratic power supply Samuel said that at the moment there is no electric power shortage. “The problem is with there is limitation with the capacity of the power transmission lines and substations. Recognising the challenge the Ethiopian Electric Utility is building new transmission lines and substations.”
The political unrest has also affected the cement factories. Most of the cement factories found in the Oromia Regional State, the epicentre of the public riots, have suffered from security problems. The cement factories were unable to transport their products and their trucks and machineries were burnt down. They were also confronted by disgruntled youth demanding employment opportunities. “After series of deliberations with the Oromia Regional States we managed to solve most of the problems with the youth,” Haile told The Reporter. “We are engaging the youth in cement distribution business. But there are still some outstanding issues. The number of unemployed youth in our country is huge. When you create job opportunity for certain number of young people more youngsters come and demand the same opportunity.”
The East Africa Cement, Concrete and Energy Summit is an annual knowledge sharing platform co-organised by the I-Capital Africa Institute and the Adama Science and Technology Institute.