Ceramic set to play key role in Africa's development

The Nigerian consultant Eguakhide Patrick Oaikhinan provides a picture of the current situation of the local industry.

Nigeria is the most populous nation and second largest economy in Africa, and with a GDP of over US $380 billion it is West Africa’s unrivalled economic powerhouse.

The policy review conducted in 2015-2016, the Naira devaluation and the Economic Recovery and Growth Plan (ERGP) launched in early 2017 are helping to unlock the country’s large economic potential by supporting local manufacturers, diversifying the economy and making the country less reliant on oil revenues. This has resulted in an influx of investment in the manufacturing sector, including the ceramic tile business which began its development in 2011.

With a production that reached 114 million sq.m in 2018, Nigeria is now the second largest tile producer in Africa after Egypt.

There are a total of 8 companies in operation in the country, all created with foreign direct investments: 6 are financed entirely by Chinese capital and the other 2 with the support of Indian investors. One of these is West African Ceramics (Royal Ceramics), one of the first to be established in the country back in 1996 and with a product range that also includes glazed roof tiles and tile fixing adhesives.

With the start-up of factories in Nigeria, China has gradually reduced its exports to the country (from 74 million sq.m in 2014 to just 5 million sq.m in 2018), volumes that in the past satisfied almost the entire national consumption. To support the local industry, the Nigerian government has also imposed import duties of up to 40%.

The rapid development of the tile industry is closely linked to the growth of construction. Building is the Nigerian economy’s second fastest growing sector, driven by rapid population growth (from 122 million people in 2000 to more than 190 million in 2017).

Nigeria has a housing deficit of 17 million units, which according to World Bank estimates would require about US $22 billion to fund. In practice, Nigeria needs to produce about 850,000 housing units annually for the next 20 years at an average cost of around US $25,750 per housing unit. Housing and infrastructure are therefore amongst the Abuja government’s top priorities, supported by organisations such as Shelter Afrique, World Bank and FMBN. For example, the government is launching a new mass housing programme to enable low-income segments of the population to purchase a property at an average price of between US $10,000 and US $15,000. A prototype of this kind of housing was drawn up and presented by West African Ceramics. The project is not only of interest to the whole of Nigeria but may also be extended to the Economic Community of West Africa (ECOWAS) as many neighbouring countries are also dependent on the richer Nigeria and are all investing significantly in residential building programmes. The benefits for the ceramic tile industry are obvious.

With a market of this size and major efforts to promote development and job creation, the Nigerian ceramic industry has enormous growth potential, especially outside the tile sector which in practice is the only area so far to have attracted investments. In the sanitaryware sector there is only one company operating anywhere in the country, CDK Integrated Industries, which along with 4 million sq.m/year of floor and wall tiles also produces 500,000 pieces of sanitaryware. There is little or no production of porcelain or bone china tableware, bricks or refractories, materials that all have to be imported to meet domestic demand.

Now well-established as the most attractive destination in West Africa for new foreign investment, Nigeria may in the future become the hub of ceramic development in the region. It benefits from huge deposits of ceramic raw materials (including ball clay, kaolin, feldspar, quartz, silica, magnesia, bauxite, silicon oxide and graphite), as well as natural gas. At the same time, there are a number of issues obstructing the development of a modern ceramic industry, particularly the high barriers to entry of a capital-intensive sector, as well as the infrastructural deficit and the need to train skilled labour.