A Sack of Cement, with the Chain No One Can See

Jul 19 , 2026. By FITSUM TADESSE ( FORTUNE STAFF WRITER )

In a market where prices swing by the hour, intermediaries control cement once it leaves the factory gate, squeezing retailers and contractors while factories and officials trade blame, reports FITSUM TADESSE, FORTUNE STAFF WRITER.

In the Jemo area of Addis Abeba, Fikremariam Wondimu no longer trades cement so much as gambles on it.

Prices move almost by the hour, and the small retailer, who, like most of his size, depends entirely on intermediaries for supply, rarely knows what a sack would cost by the time it reaches a customer.

"We face shortages regularly, and prices change almost every day," he said.

Some days, the price of a quintal jumps by as much as 150 Br between morning and evening. The volatility has turned trading into a speculative business, retailers say, in which buying is little more than a calculated bet, as prices often shift before the stock reaches the shop.

Few markets show Ethiopia's broader economic pressures as vividly as the cement market. Once a fairly predictable commodity, it has grown hard to obtain, its prices swinging, deliveries erratic, and shortages rippling out until construction itself slows. For retailers, contractors and homebuilders, the problem is no longer meeting demand but working in a market where access, timing and price seem increasingly set by intermediaries.

Recurring fuel shortages and scarce access to imported raw materials have impacted output at several plants. For the industry’s actors, supply alone can not explain the scale of the disruption. They blame intermediaries and informal traders, who have become powerful players in distribution, controlling cement once it leaves the factory gate and shaping the price end buyers finally pay.

Some of them are blamed for creating an artificial shortage, buying cement in bulk, holding it back, and releasing it at much higher prices, creating a gap between what factories produce and what reaches ordinary retail.

The people it breaks are the legitimate traders, like Ababu Marelgn, a cement dealer in the capital. He was pushed out after the market turned against him from both sides. When he went to buy, prices had already been driven up; when he later went to sell, they had fallen, and the losses in between made it impossible to carry on.

For Fikre, the intermediaries have become the gatekeepers, deciding who gets cement and at what price.

"If you can’t match the price they demand, you simply don't get the product," he told Fortune. "We buy at their prices and pass the costs to customers."

Several retailers go further, alleging that organised networks secure large volumes straight from the plants, then release them selectively to force prices up. The claims could not be independently verified, but local officials say they are investigating whether people inside and outside the plants have taken part in rigging distribution.

Central Ethiopia offers a case in point.

The Lemmi National Cement Factory, reckoned to supply 50pc of the country's cement, has struggled to run at full capacity, leaning so heavily on private input suppliers that intermediaries could impose steep mark-ups, lifting production costs and holding down output, with fuel shortages and scarce imported materials making it worse.

To clear the bottleneck, the Company has doubled its cargo vessels carrying imported input materials, with 95,000tns now en route, which officials expect to restore capacity and ease supply.

However, local officials from the Ensaro Wereda, 150Km north of Addis Abeba in the Amhara Regional State, where the plant is erected, doubt that more production will settle the market. They blame intermediaries in the Lemi town and beyond for building “a long chain that controls the supply of cement," and pledge to “dismantle the network.”

The uncertainty is already reshaping the construction sector, which is entering another period of expansion this year, where the federal government is again its engine.

Public spending on roads, power, transport, housing and industry is expected to lift real growth to between 7.8pc and 8.9pc in 2026, with more to follow over the next several years, but the sector's problem is no longer demand.

About 30pc of the 2026/27 budget goes to priority sectors, including road construction, energy, and urban development, placing construction at the centre of public investment. One forecast has the industry growing nine percent in 2025 and averaging 7.8pc a year from 2026 to 2029, another 8.9pc in 2026, on tourism, exports, transport and renewable energy.

Infrastructure remains the principal source of demand, with road projects, urban corridors, airports, water systems, and logistics facilities, as well as power generation, grid expansion, and renewable energy development. Housing and urban growth add more, especially in Addis Abeba and other fast-growing urban centres, as do industrial and manufacturing projects that feed contractors, engineering firms and materials suppliers.

The catch in inputs is cement, with annual production capacity of 20 million tonnes last year. The gap between capacity and output has left construction activities hostage to factory utilisation, distribution and bottlenecks.

MTM Engineering, which has spent four years on apartment blocks, schools and large commercial jobs, has pulled back from major structural work to focus on finishing projects that require less cement.

"The shortage and the cost of accessing cement have changed our business model," said Meles Abebe, its founding shareholder. "Taking on large projects has become too risky; we can’t guarantee a steady supply."

For contractors, late cement upends more than material costs. Schedules, financing and contracts all hinge on reliable delivery, and without it, firms say, new work piles on financial risk.

The cost of cement is driven by fuel, accounting for about 40pc to 50pc of total production costs, leaving producers exposed to every supply disruption and price spike.

According to Samuel G. Yohannes (PhD), a lecturer in the Civil & Environmental Engineering Department at Addis Abeba University (AAU), who is helping revise national construction standards under the Ministry of Urban & Infrastructure, plants should cut their dependence on conventional fuel by burning industrial waste from other sectors as an alternative energy source. He argued that a switch could be cheaper and more stable while easing environmental problems associated with waste disposal.

Samuel cited Brazil and India, countries that have integrated waste-derived fuels into their cement plants, reducing dependence on costly imported fossil fuels and advancing a circular economy.

“With alternative fuels, closer industry collaboration and investment in research and modern plant producers could become more competitive and less hostage to fuel shocks,” he said.

Policy has tried to keep pace, with officials at the Ministry of Trade & Regional Integration (MoTRI) introducing regulatory measures two years ago to curb supply disruptions, rising prices, and illicit trading, compelling the 19 cement plants to sell through licensed wholesalers and retailers while allowing big construction projects, real-estate developers, and ready-mix producers to buy directly.

The Ministry is meant to monitor production, distribution and prices, keep cement in legal channels and work with regional authorities and industry to resolve disputes. Yet shortages, price jumps and complaints about intermediaries persist, and plants, traders and end users describe a wide gap between regulation on paper and its practice, leaving doubts about whether federal trade officials grasp the true scale of the problem.

However, those in charge of running cement plants hope the worst is past. At a July 7, 2026, meeting with retailers in the capital, a Dangote Cement representative blamed recent shortages on fuel and input disruptions that are now largely resolved and put the factory at about 96pc of installed capacity.

Along with Derba MIDROC and Messebo, Dangote is one of the three largest plants among the 11 plants (including three grinders), with a combined annual capacity of 23.8 million tonnes of cement.

POI Data research counted about 15 cement producers by June 2026, yet more plants have not entered the market. The Ethiopia Logistics Masterplan Diagnostic Report of 2024 shows why the numbers mislead, with installed capacity of about 10.9 million tonnes a year in 2022 against actual output of about 6.1 million tonnes, only about 56pc utilisation, much of the gap blamed on logistics and transport.

However, retailers have heard such assurances before. Higher output figures, they say, have not yet meant easier access. The Ministry of Mines (MoM) has acknowledged the disruption and has assigned three experts this week to conduct a technical review of the entire value chain, from production capacity and inputs to distribution, with a draft report due this week and a public statement to follow.

Not everyone blames the intermediaries.

According to Abebe Dinku, a German-educated civil-engineering professor at Addis Abeba University, the intermediaries sometimes earn more than the manufacturers themselves, a distortion that rewards speculation over production and, over time, discourages efficient plants.

Many plants, though built for far more, run at only about 30pc to 40pc of capacity.

“At even 80pc, much of the shortage would ease, but repeated breakdowns keep output low,” Abebe told Fortune.

He wants firmer regulation of distribution to curb speculation and push supply to end users, including construction companies and households, through a more transparent system, warning that without it, the gains from new capacity will continue to leak to those who profit from scarcity.

As evidence of the fallout, he points to a single concrete block, which has climbed from about 35 Br to about 85 Br, a rise he attributed partly to manipulation rather than a genuine shortfall.

The producers, such as Tolosa Abera, the chief executive officer (CEO) of the Cement Producers Association, see the issue differently, locating the crisis within the plants rather than in the distribution chain. He declined to elaborate on what leaves the sector's central dispute unresolved, whether the trouble begins on the kiln floor or after the cement leaves it.

However, behind the dispute sits a market still too small for its needs. The country used about 62kg of cement per capita, compared with about 165kg across sub-Saharan Africa and nearly 500kg worldwide, a low base that revealed vast unmet housing and infrastructure needs, with ample room to grow, according to a thesis by Shimelis Fikre.

The sector relies on construction, which employs as many as 253,000 people, according to a study using Central Statistical Service (CSA) data examining Grade One to Six contractors.

Shimelis, who conducted a system dynamics model, traced the sector's limitations to production inefficiencies, heavy energy use, carbon emissions, and patchy availability of power and inputs.

PUBLISHED ON Jul 19,2026 [ VOL 27 , NO 1368]