To get the sugar industry back on track, the government is working with various stakeholders to modernise and increase productivity. DANIEL ESSIET writes.
Globally, sugar is a key industry both for manufacturing and for food security. It has increasingly gained importance in achieving economic prosperity.
In some countries, up to 30 per cent of the agriculture workforce depend on sugar production.
Ragus, an international report that continuously reviews and engages with the latest developments in the global sugar market, noted that sugar consumption could rise to 185.0 million tonnes (mln tonnes).
According to Oxford Business Group (OBG) report, African sugar production for 2021-2022 cycle is expected to reach 12.9 mln tonnes, compared with 9.6 mln tonnes in 2020-2021. In South Africa, the introduction of improved cane varieties has resulted in a higher cane crop and increased sucrose content. Also, the world’s largest sugar producing factory has just started at a cost of $1 billion in Egypt, which is a deficit market.
Despite the role and impact, there’s still an unsettling disparity in sugar production in Africa.
Sadly, in the past two decades, local industry has not been able to supply up to 10 per cent of the nation’s sugar needs, according to the National Sugar Development Council.
This is exacerbated by low productivity, inefficiencies in production systems and fragmented value chains with little coordination among sugarcane farmers.
Analysts highlighted that the sugar industry continues to face challenges that hinder its revival, and eventual growth. These include limited research and development, excess sugar importation and sugar dumping hinder the industry’s effectiveness as an economic and social catalyst.
The National Sugar Master Plan (NSMP) a roadmap for the attainment of self-sufficiency in sugar within the shortest time possible estimates that the country’s demand for sugar will reach 1.7 million metric tonnes. To satisfy this demand, it says, Nigeria will need 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.This has driven Federal Government’s agenda to swing the national sugar balance from being one of the biggest consumers to one of the largest producers in the world.
Along with various national partners, Minister of Industry, Trade and Investment, Otunba Niyi Adebayo, is working to put the sugar industry research on the front burner.
At a State House briefing on the Presidential Sugar Backward Integration Programme (BIP), in Abuja, Adebayo noted that the government was intensifying efforts to ensure the country does not lose its comparative advantage as a producer of sugar. This, according to him, would not augur well for the sustainable growth and development of the economy.
There, he reiterated that a slew of reforms have been put in place to boost the sector’ recovery, and nurture all the ingredients for sugar to flourish- namely fertile land, skilled and experienced agricultural labourers, a relatively good infrastructure of roads and canals for drainage and irrigation purposes.
His words: “I am glad to be here to brief you on our vision for Nigeria’s Sugar Industry and the milestones recorded so far on the Presidential Sugar Backward Integration Programme (BIP). As you may be aware, this is a key sector that has received the required attention by this administration to fully realise its economic development and growth and potential, which I will speak to greater details shortly. The benefits that a thriving sugar industry offers align with our development priorities.”
Despite the fact that agriculture contributes about 25 per cent of Nigeria’s gross domestic product (GDP) and almost 50 per cent of its labour force, we continue to face the challenge of meeting domestic food requirements and providing raw material inputs for the manufacturing sector. Sugar’s main importance in an economy stems from the ability of the sector to generate jobs in thousands due to the vast expanse of land that needs to be cultivated and the sheer amount of sugar cane that needs to be planted and harvested.”
For him, the sugar industry is returning to strength.
Though Nigeria still imports sugar, a mandatory BIP for beneficiaries with fiscal incentives have been established firm root in the sector.
These include Annual Sugar Import Quota Administration to manage performance; protective tariff regime to stimulate demand; support to out growers; to promote inclusiveness and sustainability; and a two-stage monitoring and evaluation framework to promote transparency and accountability for outcomes; and support for Greenfield projects which do not benefit from the fiscal incentives.
The four participants in the Sugar Backward Integration Program are Savannah Sugar Company in Adamawa State, owned by Dangote, Sunti Golden Sugar Estate in Niger State, owned by Golden Sugar Company, a subsidiary of Flour Mills Plc; Lafiagi Sugar Company in Kwara State, owned by BUA Sugar Company; and Nigeria Sugar Company, Bacita, Kwara State, recently acquired by the KIA Group.
The operators, according to the minister, have created over 15,000 jobs at their BIP sites, developed 20,000 hectares of land and put over 12,000 hectares of land under cane.
Besides these players, other Greenfield sugar projects are being developed under NSMP. These include the Gagarawa Sugar Project in Gagarawa, Jigawa State; the Contec Global Project in Isanlu Esa, Kogi State; Gummi Sugar Project in Zamfara State; Sean-Zara Sugar Project in Kwara State; Crystal Sugar Project in Jigawa State; Oyo State Sugar Processors Ltd, Iseyin, Oyo State; Goronyo Sugar Project in Goronyo, Sokoto State and Cocaset Sugar, Ondo State.
On the whole, the Minister said the NSMP would create 110,000 jobs and eliminate the yearly demand of more than $700 million in foreign exchange for the importation of raw sugar and fuel.
He noted: “It will produce 1.8million metric tonnes of raw sugar, 411.7MW of electricity, 161.2 million litres of ethanol and 1.6 million metric tonnes of animal feed annually.”
Since sugar production is one of the most critical segments of the nation’s agro-industrial capacity, a big focus has been the creation of production clusters, with the aim of allowing farmers smaller growers to be effectively integrated into larger value chains. The expansion has been very positive for the economy as well as for those whose jobs depend on agriculture. To increase sugar production, he noted, would generate more wealth and benefits for the society.
In addition, the government approved a package of measures to revitalise the sugar industry in such areas as production, renewable sources of energy, financial support, science, and innovation.
He explained: “Sugar is also a source of ethanol, a renewable fuel which can be used to contribute to the reduction of vehicle carbon emissions and improve air quality. As you may be aware, Nigeria joined other nations to make a commitment to reduce carbon emissions at the recently concluded United Nations Framework Convention on Climate Change (UNFCCC) COP26 and President Muhammadu Buhari made a specific commitment that Nigeria will cut its carbon emission to net-zero by 2060. Bagasse is the pulpy residue that is left over after juice is extracted from sugarcane. It was traditionally used to produce heat and electricity in sugar mills but we are seeing the extension of its use in national grids as a substitute for less efficient energy sources. For us in Nigeria, this is especially important as bagasse can be a source of electricity for the surrounding communities of sugar processing plants.”
On the whole, the plan is to transform the industry competitively, foster innovations that will result in an efficient and effective industry and help unlock the potential of the value chain.
Since there is a multi-agencies strategy to provide fully functional and operational services to the agricultural sector and contribute towards sustainable economic development, the Minister added that the ongoing Presidential Intervention on Irrigation would accelerate the BIP by developing 10,000 hectare (Ha) of irrigation infrastructure on six BIP sites. This, according to him, is a milestone and motivation for the operators of the Backward Integration Project.
His words: “The Federal Ministry of Finance, Budget and National Planning has granted access to the National Sugar Development Council to process Import Duty Exemption Certificates for the BIP operators. This will ease the application process and reduce processing time.”
Furthermore, he said NSDC has engaged Independent External Assessors for the evaluation and monitoring of NSMP to independently evaluate the progress made.
Quarterly Action Plans for each BIP site, he noted, will be submitted to the President to provide a report on progress on his directives and chart a way forward on emerging issues.
NSDC has never hidden the desire to make Nigeria a net exporter of sugar. There is a focus on innovative solutions mainly within the sector. It is designed to accelerate industrialisation and provide opportunities for entrepreneurs and Micro, small and medium-sized enterprises (MSMEs) to develop and expand in local and international markets.
NSDC Executive Secretary, Mr. Zacch Adedeji is championing it and reiterated the Council’s firm position on the implementation of the BIP.
The BIP has so far attracted a total of $3billion worth of investments by players in the sector. The major operators are Dangote Sugar Refinery, BUA Sugar Refinery, Golden Sugar Refinery and KIA Africa Group.The operators have their BIP project sites across states in the country.The Dangote Sugar Refinery has two BIP sites in Numan, Adamawa State and Tunga in Nasarawa State. Cumulative investments on BIP sites stand at $1billion. While BUA’s $300million BIP site is in Lafiagi, Kwara State, Golden Sugar’s $400 million BIP site is in Sunti, Niger State and Toto, Nasarawa State.
In all, the six BIP project sites have created 15,000 direct jobs and 60,000 indirect jobs. Also, a total of 3,500 direct jobs have been created by sugar refineries.The BIP sites have had tremendous economic impacts on their host communities and adjoining towns and villages.
According to him, “Nigeria has since met its raw sugar refining capacity, which is very commendable. But as I have always stated, the successes achieved in the area of raw sugar refining must be replicated in the BIP project. We can only celebrate as a sector if we are able to grow cane and produce raw sugar locally. I know it is a tough job, but we are more than ready to achieve our target objectives given our commitment and efforts.”
On his mind is a vision of a sector built on the strengths of good products, cost-effective automation, and pragmatic export strategies.
Since assumption of office last March, Adedeji has taken profound steps and birthed very innovative ideas to address challenges in the sector.
Top on the list of the issues that received his prompt attention is the perennial clash between sugar operators and members of host communities over land ownership. To solve this persistent issue, he set up the Forum of Sugar Producing State Governors, chaired by Nasarawa State Governor Abdullahi Sule. He created an investment desk, domiciled in the council to handle issues relating to investments, zero duty incentive on importation of machineries and equipment for sugar estates as well as issues relating to seizures by the NCS. This initiative has finally lain to rest the recurring face-offs between sugar operators and regulatory bodies at the nation’s ports.
The Executive Secretary called on stakeholders in the industry to work with the government to identify solutions to weaknesses and impediments, to promote a thriving sector that can meet market demands.
The goal, according to him, is to have a modern and efficient sugar industry and this requires stakeholders coming together to make it work. The ultimate aim is to secure a viable future for the sugar industry.