Swiss building materials Company, Holcim recently announced it was seeking regulatory approval to sell its 83.81 percent in Lafarge Africa Plc to Huaxin Cement by 2025 for $ 1 billion.
One of Nigeria’s many electronic tabloids announced Holcim’s planned sale with the headline, “Top cement manufacturer Holcim exits Nigeria after $1 billion sell-off, laments stagnant economy under Tinubu” (emphasis added). The tabloid’s strategy is clearly to target President Tinubu’s teeming online critics who would pounce on the Holcim’s divestment as another evidence of T’ Pain’s “failing policies” and share the story without reading it.
Holcim’s statement on divestment from Lafarge Africa did not explain the company’s decision, much less allude to economic policies under President Tinubu (or any of his predecessors) as the reason for its decision. The only information that the statement from Lafarge Africa in Lagos seem to have added is that “Lafarge Africa Plc will remain listed on NGX” following the completion of the $1 billion acquisition and subject to regulatory approvals.
Nevertheless, the tabloid’s headline stirs reflection on Holcim’s divestment and policymaking in Nigeria in the last 10 years.
Holcim Strategy to Concentrate on Core Markets
Holcim Limited in recent years has slowly shifted the focus of its business globally to a more intense concentration on core markets in Europe and America. The decision to hive off and list its American unit, with an expected valuation of $30 billion on the New York stock exchange in early 2025 reflects this strategy. Nigerian stock market capitalisation is around $36 billion and the valuation of Lafarge Africa is around $600. These figures explains why Holcim may have decided from a management effort versus return point of view to concentrate on core markets.
Holcim Has Sold Lafarge Units in Other Countries
In November 2023, Holcim said it had signed deals to sell its businesses in Uganda and Tanzania.
Earlier in 2021, Holcim also sold a 75% stake in its Zambian business to the Chinese cement group Huaxin for an enterprise value of USD 150 million.
Poor Economic Policies and Foreign Exchange Loss
Foreign exchange losses have made the Nigerian market less attractive. In the first half of 2024 alone, there was a reported foreign exchange loss of N98 billion, marking an 87.3% increase from N520.42 billion in the same period of 2023. Notably, MTN Nigeria incurred the highest forex loss, amounting to about N740.7 billion, which accounted for 39.7% of total forex losses. In the entire fiscal year of 2023, major consumer goods companies listed on the Nigerian Stock Exchange recorded FX losses of approximately N839.24 billion.
Yet, Holcim’s divestment of its shares in Lafarge Nigeria seems to be a part of its larger corporate strategy of focusing on high value or “core” markets.
