Ghana government looks to increase domestic production of cement and other special materials

Since most of Ghana’s building materials are imported to the country, the devaluation of the cedi has driven prices upward and had a profound effect on the cost of construction and availability of materials. In order to ease transactions for construction firms and boost broader economic growth, the government is working to further increase local production of many key building materials.

According to the Centre for Affordable Housing Finance in Africa, up to 80% of Ghana’s building materials are imported. “Tax levies remain high for the import of construction materials, such as tiles and flooring, and this deters importation for most To ease transactions for construction firms and boost economic growth, the government is working to increase local production of key building materials of Ghana’s construction companies,” A Y Abebrese, managing director of Taysec Group, told OBG.

Steel

The steel industry in Ghana employs around 9000 workers directly and indirectly. According to local media, annual demand for steel is 300,000 tonnes, while Ghana has a capacity to produce 450,000 tonnes. Despite more than meeting domestic demand, Ghana imports steel. “Specialised steel construction pieces are imported to Ghana for construction works,” Kojo Brompong-Mensah, managing director of BM Construction, told OBG. “Due to high inflation, labour remains expensive, but welding experience remains a highly sought-after tradecraft.”

Cement

Cement is the most commonly used building material in Ghana, and as construction and real estate activity have increased, so has demand in cement. The price of cement has steadily gone up over the past five years, and in 2015 a 50-kg bag of cement cost $8.46. The industry contributes over GHS600m ($154.8m) in taxes to the government and employs roughly 5800 people directly and indirectly. Sales are led by Ghacem, the state-owned cement company, but other companies are also entering the market, including local producer Diamond Cement Ghana, Nigerian company Dangote and China’s Sentuo Steel, which plans to invest $60m in a new cement factory. As is the case with steel, despite producing enough cement to satisfy domestic demand, Ghana continues to import cement. The country uses 6m tonnes of cement annually, and despite having the capacity to produce 9m tonnes domestically, imports over 1m tonnes annually. To bolster production, Ekwow Spio-Garbrah, then-minister of trade and industry, announced a ceiling on cement imports. “The Ministry of Trade and Industry proposes through legislative instrument to impose a ceiling on the annual importation of cement into Ghana. Companies that wish to import bagged cement shall be issued a permit to avoid the chaos that has lately saddled the sector,” he said.

Specialty Materials

Access to specialty building materials continues to expand in Ghana. Sentuo Steel, the country’s largest steel manufacturer, announced plans to open an $80m ceramic tiles facility by the end of 2017. Ceramic has typically been imported in the past. The factory is expected to employ 700 Ghanaians. “10 years ago, you couldn’t find any building materials in Ghana other than hard materials and blocks. Now you can find quality wood, door knobs and other items. Products are getting much better,” Clovis Abi-Nader, area general manager of MAN Enterprise, told OBG.

With the price of building materials closely tied to the foreign exchange rate, construction in the country is likely to see higher costs. Government intervention will help domestic producers of raw materials, but increase expenses for construction projects.

 

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The Report: Ghana 2017

Construction & Real Estate chapter from The Report: Ghana 2017

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