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Sugar is an important product for Nigeria. It is used as a sweetener in almost all the food and beverages produced locally or imported into the country.
Statistics shows that food and beverages sub-sector makes up 45 percent of the country’s manufacturing sector. It is responsible for current high sugar demand, estimated at 1.559 million metric tonnes (MT).
Sugar is also a veritable source of foreign exchange, providing millions of dollars for exporting countries such as Brazil.
In 2016/17, Brazil exported 28.15 million MT. Sugarcane contributed $43.8 billion to Brazil’s gross domestic product (GDP) – equivalent to almost 2 percent of the entire Brazilian economy and higher than the GDP of a European country like Czech Republic ($ 42.5 billion) in 2012, according to SugarCane.Org.
Data shows that Nigeria’s progress in sugar has been a mixed bag. In 1990, for example, sugar production in the country was 41, 478 MT. Importation was estimated at 603, 770 MT, while consumption was 645,248 MT. But by 2016, production had dropped to 25,000 MT while importation was almost 1.6 million MT. The significant rise in importation in 2016 could be attributed to population explosion, which has seen the country’s demography grow at 2.6 percent per annum.
After a long period of policy inconsistencies and somersaults, local sugar production rose in the wee period of Olusegun Obasanjo’s tenure, when he re-started Nigeria’s industrialisation process.
Local production surged to 50,000 MT from zero the previous four years, according to the National Sugar Development Council (NSDC).
Total consumption then was 1.17 million MT, while importation was 1.126 million MT.
As of 2016, when the price of each ton of sugar was $330 in the global market, Nigeria’s imported sugar valued at $516.15 million, mostly from Brazil.
The government of Goodluck Jonathan provided a number of incentives, including zero duty on imported raw sugar and equipment, among others. By creating the needed environment, investors announced over $2.6 billion investments in plantations and refining segments. Dangote, Flour Mills, BUA and many others went in.
A National Sugar Master Plan (NSMP) developed in 2012 to achieve sugar self-sufficiency in 2016/ 2017.
But the target was revised and extended to 2023, with a target to churn out 1.7 million MT sugar production.
The master plan has attracted deep pocket investors who are pumping over $2.6 billion into the industry.
Dangote Group, which operates Savannah Sugar, is investing $3.8 billion in sugar and rice and promises to produce enough sugar to satisfy the country’s demand in 10 years’ time.
“We have developed a sugar backward integration project plan targeted at the production of 1.5mmt per annum from various sites across Nigeria in the next 10 years. We are acquiring about 150,000 hectares for sugar plantation in Adamawa, Taraba, Nasarawa, Kwara, Kogi and Niger States,” said Abdullahi Sule, acting group managing director, Dangote Sugar, at an MoU signing with Nasarawa State government in June, 2017.
While Flour Mills of Nigeria’s Golden Sugar Company is pumping $300 million into the development of its sugar estate at Sunti, HoneyGold Group and Crystal Sugar Mills are investing $300 million and $30 million respectively to produce 200,000 mt and 60,000 MT respectively.
Similarly, Confluence Sugar Company is investing $240 million in Kogi State to produce 200,000 tonnes sugar per annum on about 37,000 hectares of land at Ibaji.
Latif Busari, executive secretary of NSDC, said there was about 400 per cent increase in sugar projects between 2013 and 2016 but 80 per cent increase when it comes to backward integration. Busari estimated new investments in the industry at N157 billion.
However, Africa’s biggest economy is still importing a lot of raw sugar from Brazil. Nigeria imported raw sugar worth 1.55 million metric tons, estimated at $516.2 million in 2016, as pointed out earlier. Per capita consumption in the country rose to 9.1 kg from 8.6kg and 8.7 kg in 2014 and 2015 respectively.
“Nigeria today spends a lot of money importing sugar in the country whereas we can grow it in Nigeria,” said Godwin Emefiele, central bank governor, in May last year.
According to Busari, backward integration targets were not met by 2016 as some of the participants did not meet the expected targets.
He said BUA scored 17 per cent, while Dangote and Golden Sugar scored 45.8 percent and 58 percent respectively in terms of backward integration.
“Community hostilities and political elite interference in access to land are preventing land acquisition. Sugar needs large hectares of land and we are asking the federal government to engage the state governments to make land available,” Busari said in a recent interview on Channels TV.
The fact is that a lot of plantations are on at the moment. Many are still at the nursery stage and investors are often harangued by communities, which is not helping the industry. Sugar production today is low and analysts want policy push to support investors.
