Why Nigeria still not self-sufficient in sugar production

28 sugar factories, 250,000 hectares of land needed- Sugar Council Nigeria spent $1.87 billion on the import of 5.54 million metric tonnes of raw sugar in the last four years, Daily Trust investigations have shown. From 2015 to 2018, the country produced 83,406 metric tonnes of sugar, a paltry volume compared to the domestic consumption […]

• 28 sugar factories, 250,000 hectares of land needed- Sugar Council

Nigeria spent $1.87 billion on the import of 5.54 million metric tonnes of raw sugar in the last four years, Daily Trust investigations have shown.

From 2015 to 2018, the country produced 83,406 metric tonnes of sugar, a paltry volume compared to the domestic consumption of 5.61 million metric tonnes during the four-year period.

Daily Trust’s analysis of sugar import data from the Nigeria Sugar Development Council (NSDC) shows that Nigeria spent a total of $8.44 billion to import 16.49 million metric tonnes of raw sugar into the country in 27 years, from 1990 to 2016.

The country spends about N101.9 billion annually to import sugar largely because domestic production supplies only about two per cent of the nation’s demand.

In 2008, the Federal Government directed the NSDC to develop a road map for the attainment of self-sufficiency in sugar within the shortest time possible.

In compliance, the council came up with the Nigeria Sugar Master Plan, which projected that the country’s demand for sugar would reach the 1.7 million metric tonnes mark by 2020.

The plan projected that for Nigeria to achieve its domestic sugar targets, the country needs to establish some 28 sugar factories of varying capacities and bring about 250,000 hectares of land into sugarcane cultivation, over the next 10 years from 2008.

It was projected that the bulk of the investment capital will come from private investors.

The plan became necessary considering the huge foreign exchange drain from the nation’s purse as a result of sugar importation.

For instance, Daily Trust’s analysis showed that sugar import value rose by $250.50 million in the last 27 years, from $265.66 million in 1990 to $516.16 million in 2016.

The analysis further showed that rise in import value over the period was partly driven by rise in import volume over the same period.

Import volume of raw sugar rose by 955,803 tonnes in 27 years from 603,770 metric tonnes in 1990 to 1.59 million tonnes in 2016.

It was also observed that the consumption of sugar has been on the rise in the last two decades and half.

From 1990 to 2016, total consumption of sugar stood at 16.68 million metric tonnes, being about 200,000 tonnes less than the 16.49 million tonnes imported into the country within the same period.

Daily Trust observed that consumption, largely due to population explosion in the country, has been on a steady rise unlike production, a development that has kept both import values and volumes on the rise over the period.

Consumption of sugar rose by 914,325 metric tonnes in 27 years, from 645,248 in 1990 to 1.56 million in 2016.

Data showed that in 27 years, Nigeria produced 579,766 metric tonnes of sugar, being about 16 million metric tonnes less than the country’s total consumption within the same period.

Domestic sugar production volumes have been fluctuating within the period reviewed but the 25,000 metric tonnes of sugar produced locally in 2016 is 16,478 metric tonnes less than the 41,478 metric tonnes recorded in 1990.

Rattled by the two per cent contribution of the local sugar industry to the country’s total domestic consumption, the Federal Government in 2008 began the process of reducing sugar imports through the implementation of the plan.

In 2017, the NSDC did a mid-term review of the implementation and the council’s Executive Secretary, Dr. Latif Busari, scored the implementation below average.

However, some gains were recorded, including N157 billion investments recorded in the sugar sector, 400 per cent increase in terms of projects but 80 per cent increase when it comes to Backward Integration Programme (BIP) with the Federal Government.

Presenting the status report on the implementation of the NSMP, spanning 2013 to 2016, Busari said following the official take-off of the Nigerian Sugar Master Plan in January of 2013, the NSDC began the implementation of the Sugar Backward Integration Programme (BIP).

Dangote, BUA and Golden Sugar refineries were approved as BIP operators and were made to sign formal commitments detailing a number of indicators by which their performance would be measured.

The target was that by the year 2018, the three of them would be able to produce 700,000 metric tonnes of sugar sourced locally from their farms, but that has not happened as the entire domestic sugar production in 2018 was 30,000 metric tonnes.

The three companies only achieved a 40.3 per cent performance average from the targets set for them.

As part of the arrangement, raw sugar quotas at the concessionary tariff of 5 per cent duty and 5 per cent levy were allocated to operators on the basis of performance of their BIP projects and as incentive to encourage operators to plough back profits to their BIP projects.

In addition, the concessionary tariff was to last for three years in the first instance.

Operators’ performance was to be assessed by two special committees set up by the NSMP – the Sugar Roadmap Implementation Committee (SURMIC) and the Sugar Industry Monitoring Group (SIMOG).

Busari said it was in line with the agreements and conditions of (BIP) guidelines that the Federal Government, after a thorough assessment of the individual performances of the operators between 2013 and 2016, deemed it necessary to introduce new guidelines and benchmarks for raw sugar allocation to operators of the BIP.

Under the new guideline, Busari said operators would be required to submit their requests for quota sugar allocation for the following year in December of the preceding year and that the year 2017 allocation shall be the last in which sugar allocation shall be based on the old criteria, including market/share refinery capacity.

The NSDC boss said as from 2018, allocation shall be strictly based on quantitatively verified improvement in performance.

Regulatory bodies such as SURMIC and SIMOG, he added, were expected to conduct quarterly monitoring of all BIP projects. Outcome of each monitoring exercise would be forwarded to all operators with copies sent to the NSDC and the Ministry of Industry, Trade and Investment.

The slow pace of the Backward Integration Programme is not the only reason Nigeria is yet to attain self-sufficiency in local sugar production.

Natural disasters such as flooding, communal clashes and smuggling have been associated with lack of sugar self-insufficiency in the country.

During a parley with journalists, the NSDC boss blamed the poor performance on some major challenges including constraints of land acquisitions, access to land, elite interference, community hostility, communal disruption and conflicts with/in host communities, incessant flooding of sugar estates, stealing and smuggling of sugar cubes.

Upon assumption of office as the Minister of Industry, Trade and Investment, recently, Otunba Richard Adeniyi Adebayo, took briefings from the management of the NSDC.

The minister said the Buhari administration had done a lot in the area of agriculture and the non-oil sectors, stressing that sugar sufficiency would further support such initiatives.

The minister expressed optimism that Nigeria would soon be at par with nations like Brazil and Mauritius, who are currently diversifying into ethanol energy production through modern sugar technology.

The minister added that government would also ensure full implementation of the ten-year national sugar master plan.

Dr Busari told the new minister that part of the plan was to create 114,000 jobs and produce 1.7 million tonnes of sugar annually.

The Executive Secretary said with reduced importation of sugar and increase in local production, about $56 million would be saved in foreign exchange.

He listed Dangote Sugar Industry, BUA International Group and Golden Sugar Company as the three major operators in the industry, accounting for about 99.8 per cent of sugar in current use in the country.

As part of the plans for the future, the council is targeting 500,000 metric tonnes of sugar production before 2023.

Speaking at a Sugar Sensitisation workshop, Dr Busari said flooding of sugarcane farms remained a big challenge to the attainment of the target.

He told participants at the workshop that Nigeria needs 250,000 hectares of land for sugarcane cultivation and 28 factories to attain national self-sufficiency in sugar.