Nigeria’s sugar masterplan has date with 2016
…On Course To Increase Production
In Nigeria, like in many parts of the world, sugar consumption for various uses is quite high; the situation has remained largely unchanged.
To service the nation’s industrial sugar requirements statistics reveal that as much as $512million was sunk in importation in 2012/2013, creating more jobs for people outside and locally draining scarce foreign exchange.
For too long, Nigeria has been under the stranglehold of sugar importation for the confectionery and beverage industry.
At the pre-inspection visit of the Sunti Golden Sugar Estate, a subsidiary of Flour Mills of Nigeria Group, Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, painted a disturbing picture of the lame effort at producing the commodity.
In the West African sub-region, while Burkina Faso produces 47 per cent, Cote d’Ivoire 54 per cent; Benin Republic 25.6 per cent; Senegal, 48 per cent and Mali, 28 per cent, Nigeria manages a paltry two per cent of the 2.5 million metric tonnes of its sugar requirement.
This is a worrisome scenario for a nation endowed with manpower, raw material, expanse of cultivable land and excellent climatic conditions.
According to data obtained from the National Sugar Development Council (NSDC), Nigeria’s sugar consumption was put at 1.1 million tonnes in 2012, when compared with domestic production of 10,843 tonnes.
The immediate past administration set out to change this with the approval of the formulated National Sugar Master Plan (NSMP) in 2012. The interventions the Plan intend to convey include trade instruments, “which give domestic products access to the local markets; and the N2bn Agricultural and Infrastructure Support Fund set aside at the Bank of Agriculture for investors in Government’s Backward Integration Programme.”
Dr. Latif Busari, National Sugar Development Council (NSDC) Executive Secretary, at a stakeholders’ workshop in Kogi State, explained the incentives put in place to attract investors. He said the Federal Government also created N10bn funding pool, managed by the Bank of Industry, with a N5bn matching fund by the NSDC.
Asserting that the progress made in the sugar sector was irreversible, Busari observed that Government policies were well conceptualised and working. In the recent past, importers of packaged sugar, a product that remained banned were still bringing it into the country.
The NSMP was developed as a core component of the Nigeria Industrial Revolution Plan to fundamentally transform the sugar sector to create jobs, generate wealth and enhance economic growth, a former Minister of Trade, Mr. Olusegun Aganga pointed out. “The case to develop the sugar sector in Nigeria is clear, and the National Sugar Master Plan is the roadmap. By implementing a full-scale sugar programme, Nigeria can produce over five million metric tonnes of sugarcane, which far exceeds the current domestic production of about 1.3 million metric tonnes per year, Busari explained.
Showing excitement at the progress made at Sunti, Mr. Paul Gbededo, GMD, Flourmills of Nigeria Plc, stressed that the NSMP is on course, even as his group’s operation is concerned. He said the sugar master plan mandate is to ensure that everyone meets the timeline from farm to finished product.
According to the Sugar MasterPlan timelines, Busari made clear that 2016 is significant in that domestic production of sugar would take off from this date. An initial output of about 700,000 tonnes is expected, if all the stakeholder take advantage of the policy window to deliver.
Busari said the projected take off output would be contributed by three private investors, Dangote, Sunti Golden and Bua Sugar mill companies. These companies signed separate agreements with the government for the execution of backward integration projects, which the Sugar council was following up.
The Dangote Group’s Savanah Sugar Company in Adamawa, which was acquired in 2002, despite of the task of commencing production in 2016, have expanded their farm in Numan to about 7,000 hectares. The goal is to expand to 10,000 hectares by 2018 with an installed capacity of 100,000 tons.
According to the Sugar Council scribe, “With the current 7,000 hectares they have started operating, they said they would be able to produce about 35,000 tonnes of sugar per annum.
“The sugar project owned by Flour Mill at Sunti, Niger State, will also begin operation this year and that is a 50,000 tonne per hectare sugar mill.
“We have another one in Hadejia; it is a small plant that can produce about 30,000 tonnes, and it is expected to also come on stream by 2016.’’
IN terms of creating employment, while Sunti Golden Sugar Estate employs about 800 employees, according to Gbededo, Savannah Sugar owned by the Dangote group has about 750 full-time employees and 5,000 indirect staff.
For Sunti Sugar, the number of jobs to be created would be more when the sugarcane mill would be operational in May 2016. The India example, where the sugar industry employs one million people directly, and six million indirectly, is widely regarded as a model worthy of replication in Nigeria.
“This means that, not only can we produce enough sugar for consumption, we can, in fact, become a net exporter into the sub-region and the wider international markets. Under our current programme, we are on track to producing 1.7 million tonnes by year 2020, and to exceed this afterwards,” said the NSDC Executive Secretary.
PART of the concessions approved for the investing operators from the Federal Government include, low tariffs of five per cent duty and five per cent levy for raw sugar import, rather than the five per cent duty and 70 per cent levy contained in the National Sugar Policy. These applied to the three prominent companies – Dangote, Sunti and Bua.
Busari said the concession would help to stabilise the local price of the commodity in case of hike since sugar production is yet to reach any appreciable level locally. For now, he revealed that according to him, capacity utilisation within the sugar refinery sector has gone up from 60 to 75 per cent.
The MasterPlan is formulated to help sugar refining companies to engage in backward integration to increase local production in milling capacity and cultivation of sugar cane.
Busari said during the stakeholders’ roundtable, “Our robust monitoring and evaluation work shows that we’re able to follow the various milestones and timelines.”
Other incentives under the plan are zero duty on machinery and spares by local refining companies, as well as 10 per cent import duty and 50 per cent levy on imported raw sugar for others. Imported refined sugar attracts 60 per cent levy and a 20 per cent duty.
The high tariffs are deliberately designed to discourage importation and encourage local production of sugar.
Sugar Operators investments
In line with the road map, the NSDC report showed that Lafiaji Sugar Company was bought by BUA Group in 2008; Sunti Sugar Company was acquired by Flour Mills Nigeria in 2009, it also owns a sugar refinery in Lagos; Savannah Sugar Company was acquired by Dangote in 2002, Dangote runs Dangote Sugar Refinery (DSR); and Nigeria Sugar Company was bought by Josepdam & Sons in 2006. Dangote Sugar produces 1.44 million tonnes. These are the pivot of the unfolding sugar production revolution in Nigeria.
For a nation in dire need of revamping and diversifying its economy, more investors would do a lot of good. Busari said some foreign firms have indicated interest in investing in the sector.
According to him, the United Arab Emirates (UAE) and its Mara Holding group has made contact with Nigeria Investment Promotion Commission (NIPC) and the Sugar Council to register interest. In addition, there are others from Netherlands and Brazil.
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