• Tuesday, July 16, 2024
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Investors to pump $2.6bn into Nigeria’s sugar industry


Nigeria’s sugar industry is recording huge growth following the decision of four key players to pump $2.570 billion into the industry.

This development follows on sharp increases in demand to 2 million metric tonnes (MT) as at the end of 2013, from 1.5 million MT recorded by the end of 2012, information from the National Sugar Development Council (NSDC) has shown.

Dangote Sugar is coming up with $2 billion investment in six states in the country through its recently acquired Savannah Sugar plc in Numan, Adamawa State, North-East Nigeria. Its target is 1.5 million MT and expansion from current 6,500 hectares (ha) to 21,000 ha to produce 100,000 tonnes of sugar annually by 2018.

HoneyGold Group, on the other hand, is to invest $300 million on two sites in Adamawa State, with the target of producing 200,000 tonnes of sugar annually; while Crystal Sugar Mills is currently investing $30 million to expand its operations to produce 60,000 tonnes of sugar per annum from its acquired 1,500 TCD sugar plant at Hadejia, Jigawa State.

“Confluence Sugar Company is investing $240 million in Kogi State to produce 200,000 tonnes sugar per annum on about 37,000 ha of land at Ibaji,” said Latif Busari, executive secretary, NSDC, in a recent release in Abuja.

Similarly, the NSDC said total national sugar demand rose to 2 million MT as at end of 2013, from 1.5 million tonnes in 2012; while refining capacity utilisation rose to 75 percent, from 60 percent in the same period. Raw sugar imports dropped to 800,000 MT from 1.4 million MT.

Africa’s second-largest economy with $262 billion size and population of 168.8 million has great growth potentials and market. But its sugar industry was badly neglected in the past, with most of the demand met by imports. In 2010, while consumption was 985,675 MT, local production was merely 30,000 MT. Importation was 955,675, but this came with a huge cost of $482,615,875. In 2011, consumption rose to 1,139,410 MT, while production was merely 35,000 MT.

Incidentally, importation totalled 1,104,410 MT as cost of these imports reached $657,123,950. However, in 2012, consumption became 1,108,980 MT, whereas production fell abysmally to 10,843 MT. Importation during this year was 1,098,137 MT as this cost the country a total of $517,222,527. Similarly, while per capita consumption was 7.1 MT in 2010, it was 7.6 MT in 2011 and 6.6 MT in 2012, data from NSDC has shown.

“Nigeria has abundant natural resources actually to support sugar growth, but it was abandoned down the line because Nigeria had too much focus on oil,” said Abdullahi Sule, managing director, Dangote Sugar Refinery, at an International Sugar Organisation (ISO) conference recently.

However, the trend is changing as backward integration and other favourable government policies have driven investors – such as Dangote (which acquired 95 percent of Savannah Sugar), Bua, HoneyGold, among others – into huge investments in sugarcane, which is a basic raw material in sugar manufacturing.

According to findings, sugarcane farmers, who previously complained of low patronage, are now encouraged to adopt modern and mechanised methods through extension services.

“Nigeria’s growing urban population and rising income levels are likely to drive demand for sugar in the coming years, as urban populations tend to consume more sugar than rural ones,” said Julia Fioretti of Reuters in a recent article.

But analysts still point at infrastructure challenge as an impediment to realisation of the industry target.

“It will take long-term and huge investment in public infrastructure and human/material resources for the country to catch up with the current and fast growing demand,” the United States Department for Agriculture (USDA) said in a recent report on the Nigerian sugar market.