Still A Long Way To Attaining Self-Sufficiency In Sugar Production

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Sugar Production, Despite Nigeria’s potential in producing sugar for local consumption, the country’s reliance on the importation of the commodity has become worrisome for a nation endowed with manpower, raw materials, expanse of cultivable land and excellent climatic conditions.

In Nigeria, like in many parts of the world, sugar consumption for various uses is quite high. The situation has remained largely unchanged. For too long, Nigeria has been under the stranglehold of sugar importation for the confectionery and beverage industry.

Sugar Production in Nigeria, According to data obtained from the National Sugar Development Council (NSDC), Nigeria’s sugar consumption was put at 1.6million metric tonnes (mt) in 2017, 1.56million mt in 2016, 1.50million mt in 2015 and 1.1 million mt in 2012.

Sugar Production in Nigeria
Sugar Production in Nigeria

Sadly, Nigeria manages a paltry two per cent of its sugar requirement. The data disclose that local production stood at 13,488mt in 2015 and rose with 85.34 per cent to 25,000 in 2016. Consumption level in 2012 was put at 10,843 mt.

To service the nation’s industrial sugar requirements statistics reveal that as much as $512 million was sunk into importation in 2012/2013, creating more jobs for people outside, and locally draining scarce foreign exchange. Last year, the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, said the country spends $100 million on importation of white sugar annually.

One of the reasons adduced for this trade deficit in the sugar industry is the challenge of sugarcane cultivation and processing to finished products, which has been underutilised over the years.

This lackluster performance has deprived the country of all the benefits derivable from a vibrant sugar sector. The annual drain on the nation’s foreign exchange earnings was put at N101.9 billion in 2011, and there was the loss of hundreds of thousands of employment opportunities for skilled and semi-skilled labour and food insecurity arising from sugar import dependence. But all these are about to change now.

Worried about the development, the immediate past administration set out to change this with the approval of the formulated National Sugar Master Plan (NSMP) in 2012. The purpose of the interventions include: trade instruments, “which give domestic products access to the local markets; and the N2 billion Agricultural and Infrastructure Support Fund set aside at the Bank of Agriculture for investors in Government’s Backward Integration Programme.”

The NSDC Executive Secretary, Dr. Latif Busari, at a stakeholders’ workshop in Kogi State, explained the incentives put in place to attract investors. He said the Federal Government also created N10 billion funding pool, managed by the Bank of Industry (BoI), with N5 billion matching fund by the NSDC.

The plan has estimated that the country’s demand for sugar would reach the 1.7 million mt mark by 2021. To be able to satisfy this from domestic production, there was a plan to establish some 28 sugar factories of varying capacities and bring about 250,000 hectares of land into sugarcane cultivation, over the next 10 years. The bulk of the investment capital is expected to come from private investors.

The Minister of Industry, Trade and Investment, Mr. Okechukwu Enelamah, last year affirmed that the NSDC would boost local production of sugar over the next few years.

In the plan, those that are prepared to do backward integration were expected to work with farmers to produce sugar.

He said the target was to provide 200, 000 tons of sugar locally every year, until the country would be self-sufficient in sugar production, adding that the policy came up due to the fact that sugarcane is grown widely in Nigeria. “Sugar processing is capital intensive and requires billions of naira to set up a sugar processing plant.”

The Central Bank of Nigeria (CBN), Governor, Mr. Godwin Emefiele, who was also worried about the unfavorable trade deficit, declared the readiness of the apex bank to partner the Nigeria-based Chinese investor, Lee Group, and Jigawa State government on the take-off of the multi-billion naira white refined sugar cane factory that could generate N60 billion annually.

READ MORE: We’ll Not Be Satisfied Until Nig Becomes A Food Exporting Country Again – Buhari

Sugar Production in Nigeria
Sugar Production in Nigeria

Emefiele, who spoke during the foundation laying ceremony of 12,000 hectares of land for the sugarcane factory in Garin Chiroma in Gagarawa Local Council Area of Jigawa State, noted that Nigeria had the potential to produce sugar for local consumption.

The NSDC Executive Secretary, said to encourage the companies, 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 the capacity utilisation within the sugar refinery sector has gone up from 60 to 75 per cent.

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.

Towards achieving the target, last August, Dangote Group signed a Memorandum of Understanding (MoU) with Niger State Government for the establishment of N166 billion state-of–art and fully integrated sugar complex.

On completion, according to the President of the Group, Aliko Dangote, the project will generate over 15,000 jobs in the state, and bring about a complete economic turn-around. The $450 million pact, which was signed at the Government House in Minna, is expected to see the company producing raw sugarcane on 16,000 hectares of land at Lavun Local Council Area, through an out-grower scheme.

The company, boasts of having Africa’s largest sugar refinery in Lagos, and a sugar cane plantation in Numan, Adamawa State.

But despite the steps, it appears the country is not in any way inching closer to self-sufficiency, as all indices have shown.

A sugarcane farmer, Timi Omololu, told The Guardian that despite the fact that sugarcane cultivation holds a lot of promise for Nigerian farmers, there is little concentration on the cultivation of the produce. “Unknown to many farmers, sugarcane has a fast rate of growth. Typically, sugarcane can be harvested over five times before it is spent (after which new sugarcane plants can be replanted). There are a lot of advantages accruable to sugarcane farmers, some of these include its being a raw material for the production of sugar, it can also be used for the production of biofuels.”

He, however, noted that the issue of land acquisition has become a serious challenge, as a majority of sugarcane farms have been turned to residential areas. He suggested that if government could formulate a legislation that would be backed by laws, on land acquisition, the dream of producing enough for the country would soon be realised.

“With what we have on ground now, attaining self-sufficiency in sugar production in 2021 as proposed is not realisable.”

In a recent interview with journalists, the Acting Group Managing Director, Dangote Sugar Refinery Plc. Abdullahi Sule said the Federal Government’s drive of ensuring the country becomes self-sufficient in 2021 may not be realistic.

Sule attributed this to the amount of investments involved and the challenges in land acquisition, manpower requirements, equipment requirement and the rest of them.

“The Sugar Master Plan is for us to be able to identify sites or size where we will be able to produce sugar locally and the Federal Government came up with various sites where it estimated that the country can produce about 1.7million mt of sugar in a10-year’s period, starting from 2012-2021. That is why in Dangote, as a company, we developed our own sugar master plan, saying that we are going to produce 1.5million mt by 2013, and we gave our self a 10-year’s period, which ends in 2023.

“However, in our effort to acquire lands, and manpower, we encounter a lot of challenges; so, we reviewed our position to 2016. In the new planning, from 2016, we plan five years to produce about one million tonnes of sugar. That will not give Nigeria self-sufficiency in sugar, but it will meet our production targets. We hope that the other companies would produce the balance that Nigeria requires. Nigeria is a consumer of roughly 1.5 million mt of sugar per annum. So, if we produce one million and other companies produce the balance of 500,000 mt per annum, we are likely going to end up with raw sugar importation in 2022-2023, and Nigeria will be self-sufficient in sugar production,” he said.