Sugar makers reach 15000MT milestone as import falls $80.2m

Good news is coming out of Nigeria’s sugar industry as the sector’s production capacity appreciated to 15,000 metric tonnes (MT) while importation tumbled by $80.2 million by end of 2015.

According to latest data from the National Sugar Development Council (NSDC), production capacity of local sugar firms rose from 12,345MT in 2014 to 15,000 MT in 2015, just as the value of sugar importation fell from a record $632.72 million in 2014 to $552.54 million by the end of 2015. But production capacity is still very low, according to analysts, casting doubt over the possibility of Africa’s largest economy achieving sugar self-sufficiency in 2018.

Data show sugar consumption rose from 1,433, 471 MT in 2014 to 1,499,724 MT in 2015. The trajectory of sugar consumption in Nigeria suggests a spike since 2012, a situation attributed to growth of retail/chain stores and that of the local food and beverage firms, as well as high demography.

“The population here is explosive,” said Tunde Oyelola, chairman, Manufacturers Association of Nigeria Export Group, in a telephone interview.

“Consequently, the demand for sugar has been rising. Dangote and other sugar companies have been investing because there are opportunities and patronage here. So that situation was understandable in 2015,” Oyelola said.

Dangote Sugar has since been pumping $2 billion in six states in the country, through its Savannah Sugar in Numan, Adamawa State, North-East Nigeria, with a target of hitting 1.5 million MT, while expanding land size from 6,500 hectares (ha) to 21,000 ha.

HoneyGold Group is investing $300 million on two sites in Adamawa state, targeting 200,000 MT of sugar annually, just as Crystal Sugar Mills pumps $30 million to expand its operations to produce 60,000 tonnes sugar/annum from its TCD plant at Hadejia, Jigawa state.

‘Similarly, Confluence Sugar Company is investing $240million in Kogi State to produce 200,000 MT sugar/annum on about 37,000 ha of land at Ibaji,  Latif Busari, executive secretary, NSDC, said.

Flour Mills’ Golden Sugar Company is also investing $300 million in Niger State. Apart from the 12,500 ha Sunti BIP project, which is rated the fastest growing among ongoing projects, Golden Sugar Company is also exploring new sites in Kogi and Niger for bigger sugar projects,” Busari said recently in Abuja.

BusinessDay gathered that several companies, including Unicane Industries in Kogi State are investing in Greenfield projects.

“In spite of these huge investments, the country still relies heavily on sugar importation. This is why the government should take a tour of Brazil to examine how they got to where they are in sugar,” said Ike Ibeabuchi, CEO of MD Services Limited.

“We need to hold local investors to account, especially those that have got incentives from the Federal Government. We need to be sure that they are making more investments as agreed with  government.

“Again, this present government needs to take industralisation seriously. It needs to give more incentives to serious investors. Sugar is vital to every food and beverage company and needs to be supported,” Ibeabuchi said.

However, experts do not hold positive sentiments in 2016. According to them, factors such as the foreign exchange situation, policy silence by the current government and insecurity, could dampen 2016 numbers.

“Importers report that they can obtain only 20 – 30 percent of their foreign exchange demand from official sources. However, for the remaining 70 – 80 percent, they rely on the high-cost parallel market,” said the United States Department of Agriculture (USDA) in its May 2016 report on Nigeria’s sugar industry.

“The Boko Haram and migrant herdsmen insurgencies in the Northeast sugar consuming region have dislodged the population with majority settled in camps as internally displaced persons and are living on donated food items,” USDA further said.

“Sources note that the new government has yet to provide funding support for sugar and other agricultural development policies,” added the USDA.

ODINAKA ANUDU & JOSEPHINE OKOJIE