An end to sugar quotas in the European Union, expected by the EU Council as early as 2017, may promote trade of the sweetener within Africa as Ethiopia and Nigeria plan to raise output, said Ecobank Transnational Ltd.
“There is a deficit of sugar in Africa, yet producers still export to Europe and import from Brazil,” Edward George, head of soft-commodities research at Ecobank, said in an April 17 interview in Kenya’s capital, Nairobi. “This will change if and when Europe bans quotas.”
Producers in the EU, the world’s largest sugar importer, can by law only sell a limited amount in the common economic area, and some local demands must be met by duty-free shipments from African, Caribbean and Pacific states that have preferential access to the market. Africa produces less than it needs, according to the International Sugar Organisation.
The curbs restrict sales to 13 million metric tons in the 27-nation bloc, which has faced sugar shortages in the past two seasons after imports from nations with preferential accords fell short of estimates.
Africa produced 6.85 million tons of sugar in 2008-09, less than the 8.7 million tons it consumed, Peter Baron, executive director of the International Sugar Organisation, said in Nairobi on April 15.
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Consumption in the sub-Saharan region could reach 11.8 million tons by 2020, he said. Illovo Sugar Ltd, the Mount Edgecombe, South Africa-based company that is the continent’s biggest producer, also has operations in Tanzania, Swaziland, Malawi and Zambia.
Ethiopia wants production to exceed 2 million tons by 2020 from 300,000 tons now and has set up a fund to pay for expansion, said Shimelis Kebede, the deputy director general of planning and projects at Ethiopia Sugar Corp, the state-run sugar company.
Nigeria, which has sub-Saharan Africa’s second-biggest sugar refinery in Lagos, will expand its fund for development of the crop to as much as N6 billion ($38 million) this year, Hezekiah Kolawole, the acting director for planning at the National Sugar Development Council, said in an April 15 interview in Nairobi.
“In a couple of years Nigeria will turn from a net importer to exporter of sugar, just like it did with cement,” Ecobank’s George said.
Nigerian importers of the sweetener have had to pay a levy on incoming shipments since January, with proceeds going into the fund, Kolawole said.
