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plant with a capacity of 13 million tpy back
in 2018 – the pandemic has applied further
pressure. According to one senior company
official interviewed by
Reuters
, the worsening
economic situation could lead to as many as
five plant closures in the coming months. In the
company’s recent annual meeting, Lorenz Naeger,
CFO of HeidelbergCement, pointed out that sales
in the country had been well below expectations.
Yousef Husseini of EFG Hermes commented on
the situation: “Several players are in deep distress
today as most producers are generating losses at
the gross and EBITDA level and balance sheets
are in bad shape in some cases […] There is an
expectation that some plants will have to close in
the coming years as the economics just don’t make
sense.”
For Algeria, much of 2019 was characterised by
political uncertainty and social unrest, which lead
to a decline in economic activity. With the election
of Abdelmajid Tebboune in December, the new
government now faces further difficulties in the
wake of the pandemic. GDP growth averaged just
0.9% in 2019, down from 1.4% in the previous
year and is predicted to contract by -3% in 2020.
A 51% decline in export revenues will see the
country’s fiscal deficit rise to 16.3% of GDP,
even with cuts to government spending. Despite
this economic gloom, several major construction
projects have been recently announced. According
to Arezki Berraki, Minister of Water Resources,
the country has plans to construct three seawater
desalinisation plants in the province of Algiers.
The plants will have a combined capacity of
300 000 m
3
/d and are designed to reduce nearby
cities’ reliance on rainwater. The country also has
plans for a significant increase in its solar power
capacity and intends to build 4000 MW of capacity
between 2020 and 2024. The project is expected
to create 56 000 construction jobs and 2000
permanent jobs once operational. A statement from
the government read as follows: “The completion of
this project would allow us to position ourselves on
the international market via the export of electricity
at a competitive price, as well as the export of
know-how.”
At the beginning of this year, the Institute of
Chartered Accountants for England and Wales
(ICAEW) had predicted robust economic growth
of 6.3% for Sub-Saharan Africa (SSA), which
would then ease to 6.1% in 2021. In contrast, the
World Bank now predicts that the region will face
US$37 – 39 billion worth of economic losses this
year, reducing agricultural productivity, weakening
supply chains, increasing trade tensions, limiting job
prospects, and exacerbating political and regulatory
uncertainty. Economic growth is expected to
undergo a contraction in the range of -2.1% to
-5.1% in 2020.
Nigeria, despite being something of a regional
superpower, was facing a number of economic
challenges prior to the pandemic. At the beginning
of the year, the country’s national debt had
exceeded US$80 billion and was at 12% of GDP
and rising. According to some estimates, as much
as 55% of the country’s revenue was being spent
on servicing its debt. Economic growth at 2.5%
was also lower than had been expected – based
on a population growth of 3% p/a, the economy
should have been expanding at 5 – 6% p/a.
In September of 2019, Aliko Dangote announced
that Dangote Group was planning on increasing
cement production in Africa to 62 million tpy, a
29% increase. 6 million t of this new production
would be established in Nigeria, with the rest
being spread across West Africa, including
in Niger and Côte d’Ivoire. The company also
invested US$60 million in the construction of a
new 1.5 million tpy cement plant in Togo, which
would utilise Nigerian and Togolese clinker. Another
Nigerian billionaire, Abdulsamad Rabiu, oversaw
the merger of Obu Cement and Cement Company
of Northern Nigeria (CCNN) to create Nigeria’s
second largest cement producer. This process
completed at the beginning of the year with the
new company being named Bua Cement Plc. In
the meantime, work had been progressing on the
construction of the 3 million tpy Sokoto Kalambaina
II plant, with completion originally slated for the
second half of this year.
Another regional giant, South Africa, had also been
facing economic difficulties at the close of 2019,
with predictions of “sluggish growth” even prior
to the pandemic – indeed, the IMF has described
South Africa’s economic growth as “close to nil
since 2014.” Business School’s Raymond Parsons
wrote in Business Report at the beginning of 2020,
“South Africa’s domestic outlook remains a tough
and sombre one, with poor growth prospects. The
contours of the economic and financial landscape
dictate that this is a pivotal year, if economic recovery
is to be fostered, more jobs must be created,
public finances brought under control and business
confidence lifted”. South Africa’s cement industry
had also been grappling with the problem of cheap
imports undercutting domestic business, with
imports rising by 239% last year. This drove the
cement sector to apply to the Department of Trade
& Industry for a special designation for domestically
produced cement, so that local producers might
benefit from an ambitious investment programme of
US$100 billion.
According to
Forbes
, the economies of the
Middle East are on track to face significant
economic disruption in 2020 due to the pandemic
– collapsing oil prices and political turmoil will
also have an impact. Oil exporters are set to be
particularly hard hit and are likely to see a 3.9%
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World Review 2020