Low-income earners are increasingly excluded from the housing market – Adewole

Bamidele Adewole, a real estate developer and finance professional, breaks down surging cement prices, market concentration and Nigeria’s worsening housing affordability crisis.

A seasoned executive with over two decades of experience across real estate investment, financial advisory and business development, Adewole brings a data-driven, economist’s lens to housing finance and market dynamics. He has led high-value transactions and now heads a firm delivering residential and commercial projects across key urban corridors. In this interview with KENNETH ATHEKAME, he explains why cement accounts for up to 40 percent of building costs and the structural forces driving its persistent price surge. Excerpts:

Can you briefly describe your professional background and your involvement in Nigeria’s housing sector?

I have spent over a decade in real estate, starting in property sales before moving into full-scale development. My focus today is on structuring, financing and delivering residential projects, particularly within Lagos. Before that, I worked in financial services and within a diversified conglomerate. That experience shaped my view of real estate not just as construction, but as an investment class. My background in economics and finance helps me approach housing through cost, pricing and market dynamics.

How significant is cement in determining housing costs?

Cement is arguably the most critical input in construction. In a typical Bill of Quantities, it accounts for about 35 to 40 percent of total project cost. It is used across every stage from foundation to finishing making it the binding element in construction. Any increase in its price has a direct and amplified effect on overall building costs.

What major shifts have you observed in the building materials market?

There has been a sustained rise in the prices of building materials. This has made cost planning more difficult and put pressure on project viability. Developers are often forced to increase prices to stay afloat, but demand is weak and price-sensitive. In many cases, the focus has shifted from profitability to survival, making affordable housing even harder to deliver.

What is driving the rise in cement prices?

The key driver is market structure. Nigeria’s cement industry operates largely as an oligopoly, with a few dominant players controlling supply. With strong demand and limited competition, pricing power is concentrated. Cement production also relies heavily on local raw materials, so foreign exchange is not a major factor. The trend suggests that price increases, not production growth are driving revenues.

To what extent are energy costs, exchange rates and inflation responsible?

They play a role, especially energy and logistics, but their impact is often overstated.

Raw materials are largely local, so exchange rate exposure is limited. Inflation affects operations, but it does not fully explain the scale of price increases. Market concentration remains the bigger issue.

Do supply chain dynamics contribute to pricing?

Yes, but market concentration is more significant. Major producers have strong distribution networks, which create barriers for new entrants.

Even if smaller players can produce competitively, getting products to market at scale is a challenge. This reinforces existing dominance.

How has the price surge affected construction costs in practical terms?

The impact has been significant. Cement prices have risen from about N4,000–N5,000 per bag in 2022 to around N12,000–N13,000 today. For developers, this means major cost increases and strained project budgets. For individuals, it often leads to stalled construction. The pressure is likely to persist.

What does this mean for low- and middle-income earners?

It is worsening affordability. Low-income earners are increasingly excluded from the housing market, while middle-income households rely more on mortgages.

Even then, many cannot meet equity requirements or qualify for financing. Rising costs are shrinking the pool of potential homeowners.

Is the sector experiencing a slowdown?

Yes. Delays and project cancellations are becoming more common. Beyond material costs, developers face high interest rates, land title issues and weak demand. However, cement prices remain a central constraint.

What are the broader economic implications?

There is a multiplier effect. Higher construction costs lead to higher housing prices, reducing disposable income and consumption.

At the same time, slower construction affects jobs and supply chains, ultimately dragging on economic growth.

How is this affecting urbanisation and informal housing?

Urban projects are being delayed or scaled back. Even informal housing is affected because cement remains essential.

This increases costs across both formal and informal segments.

Will this worsen Nigeria’s housing deficit?

Yes. The housing gap will likely widen.

Most government interventions focus on demand through financing, but there is a need to address supply, especially the cost of building materials.

How do you assess current government policy on cement pricing?

There is limited direct intervention at the moment. Given cement’s importance, there should be more engagement between regulators and industry players to address pricing and its economic impact.

Is there sufficient competition in the cement industry?

No. High entry barriers, capital, operations and distribution limit competition, leaving pricing power with a few players.

What role should the government play?

The government should adopt a measured approach, starting with engagement and moral suasion. If necessary, more formal regulatory actions may be required to ensure fair pricing and encourage competition.

Are alternative building materials gaining traction?

Alternatives like clay, bamboo and engineered wood exist, but adoption is still low. The industry remains heavily dependent on cement.

What innovations could reduce dependence on cement?

There are emerging alternatives and new construction methods, and developers are exploring them. However, adoption is slow due to market acceptance, regulatory constraints and environmental considerations. For now, cement remains central to construction in Nigeria.