Lafarge-Africa's supply chain management
Many factories rely on imported materials and energy, which makes them vulnerable to international price shifts and local currency weakness. However, Lafarge-Africa’s supply chain took a different path. The company built a self-sufficient system by changing how and where it sourced its materials and energy. This move helped it stay profitable while others were cutting output.
Today, Lafarge Africa’s supply chain now models what is possible across Africa when companies make smart, local decisions.
How Forex and Import Pressures Hurt African Supply Chains
African supply chains are under pressure. Foreign exchange (FX) is harder to access, local currencies are unstable, and importation costs have risen sharply. In countries like Nigeria, where the naira has lost significant value over the last decade, businesses have struggled to survive.
Many African countries face a similar set of problems:
- Shipping and port charges continue to rise, adding to the total cost.
- Currency devaluation makes every imported product more expensive.
- Various import restriction policies have blocked access to official FX for many goods.
- Forex pressure in Nigeria means companies cannot get enough dollars to pay for imports.
For companies that rely heavily on imported raw materials, fuel, spare parts, or packaging, this leads to delays, higher expenses, and reduced production. The FX volatility and supply chain exposure have been a major threat across the manufacturing and construction industries.
Lafarge Africa’s Supply Chain Turning Point
Lafarge-Africa operations in Nigeria include some of the largest cement plants in the country. In the past, the company needed to import many of its production inputs, especially fuel, gypsum, and spare parts. However, that model became risky as the pressure on the Forex rose.
Accessing dollars was difficult. Importation became slow and expensive. And operating costs shot up.
During Nigeria’s FX crisis (2015 and again in 2020), Lafarge Africa’s supply chain shifted its strategy completely. It focused on building a self-sufficient supply chain that Africa could look up to. That meant reducing imports and replacing them with local options.
The company leaned into government industrial policy and made localization a core part of its business.
Inside Lafarge Africa’s Supply Chain Strategy
The Lafarge-Africa supply chain strategy focused on four main actions: sourcing local raw materials, using domestic energy, integrating operations, and aligning with policy. Here is how each worked:
1. Local Raw Material Sourcing
Lafarge reduced its dependence on foreign materials by:
- Using industrial waste (like fly ash) to replace additives.
- Mining its own limestone, clay, and laterite from Nigerian quarries.
- Developing a local supplier base for gypsum, which was once mainly imported.
By 2020, more than 90% of Lafarge’s raw materials came from within Nigeria. That shift protected the company from dollar shortages and rising global prices. It also made planning productions much easier and limited disruptions since local sources are more stable.
2. Alternative Fuels and Local Energy
Alternative fuels in cement production helped Lafarge reduce costs. Instead of buying imported fuel oil or coal, the company did the following:
- Used Nigerian natural gas through direct pipeline connections.
- Mined coal locally from Maiganga to power the Ashaka Cement plant.
- Sourced biomass from local waste: palm kernel shells, sawdust, rice husks.
- Built a 16MW power plant running on domestic coal at Ashaka, Gombe State.
By 2023, Lafarge-Africa’s supply chain and manufacturing operations had processed over 250,000 tons of biomass as fuel. This cut its spending on imported energy and turned local waste into value. It also improved energy security, so plants could keep running during supply interruptions.
3. Vertical Integration and Operational Control
Lafarge-Africa gained better control by going the vertical integration route. This meant owning more of its supply chain or directly managing more parts of it. This helped reduce the risk and costs of operations. Examples include:
- Owning raw material sources (quarries, coal mines).
- Expanding in-house logistics, with more trucks and better routing.
- Operating captive power plants instead of relying on the national grid.
- Working with a UK partner to simplify imports of machine parts, cutting freight costs by 12%.
These changes made Lafarge-Africa’s supply chain more efficient. Plants ran with fewer stoppages. Costs were easier to manage. And the business could operate without relying too much on outside providers.
4. Policy Engagement and Local Supplier Development
Lafarge-Africa worked closely with the Nigerian government to align with policy goals. It supported the cement import ban and the push for industrial self-reliance. The company’s supply chain also:
- Invested in training and support for small businesses (suppliers)
- Joined national forums to help shape infrastructure and trade policy.
- Built partnerships with local SMEs to supply packaging, biomass, and more.
This gave Lafarge-Africa access to goodwill, policy support, and reliable local vendors. It also created jobs and spread income across its supply chain.
What Lafarge-Africa’s Supply Chain Achieved
Lafarge Africa’s supply chain operations in Nigeria prioritized localization. And the strategy paid off. Here are some of the results:
- Processed over 100,000 tons of alternative fuels since 2013.
- Avoided production stoppages during fuel and FX shortages.
- Reduced cement production costs by switching to cheaper energy.
- Improved supply chain resilience in Nigeria during economic crises.
- Lowered foreign exchange costs by sourcing nearly everything locally.
By building a supply chain rooted in local materials, local energy, and local partnerships, Lafarge made itself less vulnerable to outside shocks.
Lessons for African Supply Chains
Lafarge-Africa’s supply chain’s success shows that supply chains in Africa can thrive under pressure if they focus on a few key strategies. Learning from the company’s supply chain template, some of these strategies include:
1. Think Local First
In a world where trade uncertainties are ramping up, localization just might be the answer. Using the local raw materials, various countries across the continent offers ensures long-term stability. This is also true even if finding or developing alternatives takes time.
2. Mix Your Energy Sources
Relying on one fuel is risky, especially considering the poor power supply on the continent. Supply chains should combine gas, coal, and biomass. This helps with energy cost reduction strategies and keeps plants running.
3. Control What You Can
While many companies and supply chains naturally avoid vertical integration in manufacturing, it has its advantages in developing economies like those in Africa. It makes operations smoother. When your company owns the mine, the power plant, and the trucks, your supply chain tends to avoid many delays.
4. Build Local Partnerships
Train suppliers if necessary. Pay them fairly. And invest in helping them grow. This builds a chain of people and companies who support your business and supply chain, especially during crises.
5. Engage With Policy
Governments in Africa that are serious about boosting their economy are often looking to support local industry. Kenya’s automotive industry is a typical example. It is important for supply chains operating across the continent to work with them. Aligning plans with national goals can lead to stability and support.
Final Thoughts
Lafarge-Africa’s supply chain success in Nigeria came from planning, local action, and staying close to the ground. The company turned its biggest threats, such as FX risk and high importation costs, into an advantage. It used local mines, energy, and partnerships to build a strong system.
Other African supply chains can do the same. By focusing on local production, Nigeria supports and builds efficient, flexible systems, and supply chains across the continent can become more stable, independent, and better prepared for the future.
Obinabo Tochukwu Tabansi is a supply chain digital writer & ghostwriter helping professionals and business owners across Africa explore various strategies that work and learn from the success and failures of various supply chains across the globe. He also ghostwrites social content for logistics & supply chain businesses
