Cement crisis hampers Angola boom

LUANDA – Angola’s booming post-war construction industry is being hobbled by shortages of one of its most basic ingredients – cement.

“Sometimes we have to stop work for a month or two at a time because we just can’t get hold of materials,” a foreign project manager at a construction company in the capital Luanda. Industry officials say cement shortages in sub-Saharan Africa’s second-largest oil producer are to blame for prices more than doubling in the past three years to US$15 to US$20 for a 50-kilogramme bag.A bag cost US$12 one month ago.”We’re used to high costs in Angola, but our costs keep on rising and cement is just one example,” the project manager said, on condition of anonymity.Angola’s government, which is seeing billions in oil revenue flow into its coffers, has embarked on a massive reconstruction of roads, bridges, schools and hospitals and residential housing since the end of a devastating 27-year civil war in 2002.It has forecast economic growth to be just under 20 per cent this year and slightly more than 16 per cent in 2008.But Luanda, built to accommodate half a million people and now home to at least five million, is facing a dire housing shortage, which has led to sky-high prices for houses and flats and forced many inhabitants to live in sprawling slums.Monthly rents for one-bedroom flats can rise to US$5 000 or higher in the city, while commercial space is even costlier.”The price of cement is significant, but at the end of the day (housing) prices are driven most strongly by large oil windfalls driving up demand, combined with shortage of land and all sorts of supply bottlenecks,” said Nicholas Shaxson, an Africa analyst at London think tank Chatham House.PRODUCERS STRUGGLE There are fears the cement crisis could cripple Angola’s construction industry, which accounted for 4,4 per cent of the country’s total GDP in 2006, according to the Catholic University of Angola’s annual economic report for that year.Two manufacturers operating in Angola are unable to keep up with demand, estimated at four million metric tonnes annually.Luanda’s Nova Cimangola, which is 40 per cent owned by the government, produces around 1,2 million metric tonnes per year.Secil, based in the southern city of Lobito, makes 300 000 metric tonnes.The government has approved plans to establish other larger cement manufacturers, but none are in production yet.The shortage has prompted Angola to turn to imports, especially from China.Construction officials, however, complain about the quality and cost of the imports and say they are often delayed at ports.”I don’t understand why they don’t make it easier.There is so much demand here,” said an Angolan entrepreneur who has give up on a bid to import cement due to the bureaucracy involved.While industry sources say some building works have had to be put on hold for months at a time because of the cement shortages, the general mood in the industry is buoyant as Angola’s oil-driven economy booms.”Angola is like the African version of China or India.Because of the oil, they have so much cash, and there are so many institutions ready to lend money.They are just moving ahead as if the money didn’t matter,” said an executive with a large engineering firm.Other countries in southern Africa, a region that has experienced strong economic growth in the past decade, also are struggling to find adequate supplies of cement.South African officials have expressed worries of a looming shortfall as the country builds and refurbishes soccer stadiums and other infrastructure in preparation for its hosting of the 2010 World Cup.The African economic powerhouse has begun tapping cement from nations like Vietnam to help meet rising demand.Nampa-ReutersIndustry officials say cement shortages in sub-Saharan Africa’s second-largest oil producer are to blame for prices more than doubling in the past three years to US$15 to US$20 for a 50-kilogramme bag.A bag cost US$12 one month ago.”We’re used to high costs in Angola, but our costs keep on rising and cement is just one example,” the project manager said, on condition of anonymity.Angola’s government, which is seeing billions in oil revenue flow into its coffers, has embarked on a massive reconstruction of roads, bridges, schools and hospitals and residential housing since the end of a devastating 27-year civil war in 2002.It has forecast economic growth to be just under 20 per cent this year and slightly more than 16 per cent in 2008.But Luanda, built to accommodate half a million people and now home to at least five million, is facing a dire housing shortage, which has led to sky-high prices for houses and flats and forced many inhabitants to live in sprawling slums.Monthly rents for one-bedroom flats can rise to US$5 000 or higher in the city, while commercial space is even costlier.”The price of cement is significant, but at the end of the day (housing) prices are driven most strongly by large oil windfalls driving up demand, combined with shortage of land and all sorts of supply bottlenecks,” said Nicholas Shaxson, an Africa analyst at London think tank Chatham House.PRODUCERS STRUGGLE There are fears the cement crisis could cripple Angola’s construction industry, which accounted for 4,4 per cent of the country’s total GDP in 2006, according to the Catholic University of Angola’s annual economic report for that year.Two manufacturers operating in Angola are unable to keep up with demand, estimated at four million metric tonnes annually.Luanda’s Nova Cimangola, which is 40 per cent owned by the government, produces around 1,2 million metric tonnes per year.Secil, based in the southern city of Lobito, makes 300 000 metric tonnes.The government has approved plans to establish other larger cement manufacturers, but none are in production yet.The shortage has prompted Angola to turn to imports, especially from China.Construction officials, however, complain about the quality and cost of the imports and say they are often delayed at ports.”I don’t understand why they don’t make it easier.There is so much demand here,” said an Angolan entrepreneur who has give up on a bid to import cement due to the bureaucracy involved.While industry sources say some building works have had to be put on hold for months at a time because of the cement shortages, the general mood in the industry is buoyant as Angola’s oil-driven economy booms.”Angola is like the African version of China or India.Because of the oil, they have so much cash, and there are so many institutions ready to lend money.They are just moving ahead as if the money didn’t matter,” said an executive with a large engineering firm.Other countries in southern Africa, a region that has experienced strong economic growth in the past decade, also are struggling to find adequate supplies of cement.South African officials have expressed worries of a looming shortfall as the country builds and refurbishes soccer stadiums and other infrastructure in preparation for its hosting of the 2010 World Cup.The African economic powerhouse has begun tapping cement from nations like Vietnam to help meet rising demand.Nampa-Reuters