· Capital Ethiopia
Mugher Cement faces calls for urgent reform as market share falls
Topics:Market
Summary of the Capital Ethiopia report
For decades, Mugher Cement Factory has been a mainstay of Ethiopia's construction sector. The state-owned enterprise has supplied cement and clinker for private investment, government projects, housing developments and roads across the country. However, a performance audit by the Office of the Federal Auditor General (OFAG) has identified serious challenges in production, raw-material supply, equipment maintenance, procurement and sales accountability.
Key points
- A federal audit found that Mugher's share of the domestic cement market fell to about 9.77 percent, fourth behind Dangote, Derba and National.
- Mugher produced 1,522,011 tonnes of clinker between the 2015 and 2017 fiscal years against a plan of about 2.1 million tonnes.
- The audit found weak maintenance, procurement gaps and distributors who bypassed competitive tendering.
Real.et analysis
Capital reports that a performance audit by the Office of the Federal Auditor General found serious problems at Mugher Cement, the state-owned factory. Its share of the domestic cement market fell to about 9.77 percent, which puts it fourth behind Dangote, Derba and National.
What this means for buyers and self-builders
Cement is one of the largest inputs in any building. When a major supplier underperforms, supply and prices can suffer. The audit describes a factory that produced less than planned for years. Line One reached 75.8 percent of its cement target and Line Three 72.5 percent. Line Two had long stoppages. Kilns, mills and conveyors stood idle for long periods because of weak maintenance and a shortage of spare parts.
The audit covers the 2015 Ethiopian fiscal year through the second quarter of 2018, which is roughly mid-2022 to the end of 2025. So it describes the recent past, not a forecast.
Points for people who build or buy:
- Self-builders. If you build your own house, get cement prices from several distributors. The audit found cases where distributors bypassed competitive tendering or got allocations after losing bids. Weak distribution rules can create price gaps between sellers.
- Off-plan buyers. Developers often cite material costs when they ask buyers to pay more. Ask for a fixed price, or a clear formula for any adjustment, before you sign.
- Resale buyers. When building costs rise, new homes cost more to deliver. That tends to support the prices of finished homes.
What this means for the market
Other producers already supply most of the market. A weaker Mugher means the country depends more on them. The audit calls for better supply-chain planning, compliance with procurement rules, stronger financial controls and a more transparent distribution system. If those reforms work, Mugher could add supply over time. The audit also notes that new machinery alone will not fix the factory without technical supervision, sound financial planning and access to foreign currency.
Our guide to construction material prices in Ethiopia tracks cement, steel and other inputs. See our house prices guide for prices by area. Our article on a Supreme Court ruling that lets developers reprice shows how cost rises can reach buyers.