Nigeria has seen its sugar production remain relatively constant in recent years despite the introduction of the backward integration policy aimed at boosting local production of the sweetener, while whittling down importation.
The policy was initiated in 2013 as a way of harnessing Nigeria’s sugarcane resources, creating jobs and a ready market through the value chain, while bridging the country’s estimated 1.7 million metric tons of sugar demand and supply gap.
Under the initiative, the Nigerian government entered into an agreement with local investors in the sugar industry that the later must make sizeable investments in the subsector within a specified period in order to guarantee self-sufficiency in the production of the sweetener.
Also, operators with backward integration plans were given import quotas to import raw sugar. But with the progress recorded thus far, the country will be unable to achieve the 2020 target of self-sufficiency of the backward integration policy which is a critical part of the Nigerian National Sugar Master Plan.
Industry players have attributed the slow progress made to poor monitoring of the policy, which has resulted to some local companies flouting the agreement by importing more of the products, rather than making the agreed investments.
“The government has not been sincere in monitoring the backward integration policy. Certain companies have not been quite diligent in adhering to the rules,” Sadiq Usman, head- corporate business development, Flour Mills said in a telephone response to questions.
“Also, documentation, planting issues, weak infrastructures and land rights are still a big problem for us and these factors have continued to slow the pace of our development in boosting sugar production,” Usman said.
He said that Flour Mills – Nigeria’s second largest maker of the sweetener lost 75 percent of its sugarcane plantation owing to floods that ravaged their farmlands in 2018.
“Last year, the floods wiped away a significant proportion of our sugarcane production. It affected close to 2,000 hectares of the 3,000 hectares we planted and now we are replanting again.”
Despite the policy helping in attracting investments into the industry, it is still unable to impact production positively.
Similarly, data from the National Sugar Development Council (NSDC) shows that production has only increased marginally in the last four previous years to an average of 15,208MT, while decreasing to 14,918MT in 2017 from 25,000MT in 2016.
This indicates a 40 percent year on year decrease in production.
“Even though there have been a lot of efforts from major sugar companies like Flour Mills of Nigeria, BUA Group, and Dangote Group trying to cultivate huge expanse of land for sugar production, they are yet to fully produce the sugar that we need, so importation is still high,” Ayo Akinwunmi, head of Research, FSDH Merchant Bank told BusinessDay.
The country’s sugar consumption has been on decline since 2016 mainly driven by low consumer purchasing power despite the economy has rebounded from recession.
“The still rebounding Nigerian economy from recession has not resulted in increased purchasing power of most households in Nigeria and this has impacted sugar consumption in the country,” the United States Department for Agriculture (USDA) said in its May 2018 Nigeria’s sugar report.
This is also evident in the NSDC data which shows that consumption declined by 16 percent from 1.6million tons in 2016 to 1.3million tons in 2017. Data for 2018 is yet to be published by the Nigeria sugar organisation.
The low consumption has also affected the volume of importation of the sweetener as it has declined by 17.5 percent from 1.6 million in 2016 to 1.3 million in 2017.
Similarly, Nigeria has spent a whooping N140 billion in the importation of raw sugar to be refined into fine sugar for consumption in the first eight months of 2018 with Brazil accounting for 80 percent of all the imports within the period.
