Dangote vs others: Tackling competition in Nigeria’s cement industry

A general discussion around cement in Nigeria revolves around one name—"Dangote". There is envy around the name for its wealth from manufacturing operations, including cement production. Most times, though, the name is "dragged" for the unsteady and rising prices of the limestone byproduct. 

Building developers and even Nigerian lawmakers have blamed their projects' high cost and slow expansion on rising cement prices. Last year, the price of a 50 kg bag of cement rose by 44% from ₦2,500 to ₦3,600. Today it is about ₦4,000.

Many believe that we have rising cement prices because Dangote Cement, which has the largest market share (60%) in the industry, has no competition. But it has competitors, both foreign and local, that are vying for market share. So how come their presence does not lead to competitive pricing?

Understanding oligopolies

Let's go back to ECON 101 to explain pricing in a market structure with few players,