Tag: Sugar

Nigeria’s heavy reliance on imported sugar continues unabated at approximately 98,000 metric tonnes in March 2025.

Despite repeated calls for enhanced local sugar production, the dependence on imports remains significant, as recent port activity reports reveal substantial shipments of raw sugar entering the country.

This growing trend aligns with concerns raised by Governor Abdullahi Sule of Nasarawa State and Director-General of the National Centre for Technology Management (NACETEM), Dr Olusola Odusanya, who both highlighted the economic risks of Nigeria’s over-reliance on sugar imports. 

According to the Nigerian Ports Authority’s (NPA) latest “Daily Shipping Position” report, raw sugar imports continue to dominate berthing activities at major terminals. 

The report showed two significant shipments are currently being discharged, including AEPOS, a 199.9-metre vessel, berthed at Apapa Bulk Terminal Limited (ABTL) on March 14, 2025, carrying approximately 48,000 MT of raw sugar from Brazil, expected to depart on March 29, 2025. 

And SEA DIAMOND 1, a 189.94-metre vessel, berthed at Greenview Development Nigeria Limited (GDNL) on March 19, 2025, handling 50,000 MT of bulk sugar, scheduled to depart on March 27, 2025. 

This large importation reflects the country’s inability to meet domestic sugar demand, with over 96 per cent of its annual sugar consumption of approximately 1.8 million MT sourced from foreign markets. Nigeria’s local production remains at a paltry 48,000 MT, leaving a supply gap of about 1.75 million MT. 

Recall that in September 2024, during a visit by the Country Director of the International Fund for Agricultural Development (IFAD), Dede Ekoue, at the Government House in Lafia, the governor highlighted the implications of the nation’s sugar consumption pattern. 

 “Today, Nigeria consumes roughly about 1.4 to 1.6 million metric tonnes of sugar. This quantity, about 96 per cent, is imported as raw sugar from Brazil and refined at our three refineries owned by Dangote, BUA, and Golden Penny. If we establish the entire value chain of sugarcane production in Nigeria, it could create employment opportunities for at least 500,000 people,” Sule stated. 

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In a similar vein, NACETEM’s DG warned of the economic risks posed by this dependency during the Nigeria-EU Innovation Days in July 2024. 

 “Everyone of us might have consumed sugar this morning. But we import it instead of producing it on a large scale and exporting it. This will fetch us enough foreign exchange and create jobs in the country,” he noted. 

Odusanya further explained that with large-scale agricultural production supported by innovative technologies, Nigeria could produce more than five times the sugar it consumes annually. 

On his part, the Executive Secretary of the National Sugar Development Council (NSDC), Kamar Bakrin, last month, revealed that the country needs a $5 billion investment to achieve sugar self-sufficiency. He also dismissed calls for a sugar tax, arguing that Nigeria’s per capita sugar consumption of 9 kg per year is low compared to global standards. 

“Achieving sugar self-sufficiency will require not just investment but a commitment to addressing key issues such as mechanisation, security, and infrastructure,” Bakrin said. 

Comparing the country’s production with global leaders, Bakrin noted that Brazil, India, and Thailand produce 41 million MT, 36 million MT, and 14 million MT respectively. He said even within Africa, Nigeria lags behind Egypt and South Africa, which produce 2.8 million MT and 2.4 million MT respectively. 

Meanwhile, the NPA report revealed a total of 23 occupied berths with various terminals handling bulk commodities, containers, and petroleum products. 

Comparative analysis revealed a 12 per cent increase in discharged cargo over the past week, largely driven by higher volumes of wheat, sugar, and soya bean oil. Container handling also recorded a modest 3 per cent increase in total TEUs processed, indicating steady activity in the nation’s ports. Notably, bulk sugar imports rose by 18 per cent compared to the previous month, reflecting heightened demand from food manufacturing industries that heavily rely on imported raw sugar for their production processes.

Additionally, petroleum product imports, particularly PMS (Premium Motor Spirit), declined by 10 per cent due to policy adjustments in the downstream sector and a shift toward alternative energy sources. 

The persistent sugar importation has, however, raised eyebrows among stakeholders in the maritime sector.

According to a senior official at the Nigerian Ports Authority, who chose to remain anonymous, “The high volume of raw sugar imports is a clear indication of the local industry’s inability to meet demand. We are actively working to improve port infrastructure to handle the rising cargo volumes efficiently, but more needs to be done to encourage local sugarcane cultivation and processing.” 

Meanwhile, a representative of ENL Consortium, which operates several berths at Lagos ports, expressed optimism about the government’s commitment to improving port efficiency. 

 “We are seeing efforts to enhance port efficiency, but the underlying issue of heavy dependence on imports still needs to be addressed. Encouraging local production through incentives and infrastructure development is key,” the representative said. 

Despite the active handling of sugar and other bulk commodities, several terminals remain underutilised. The Atlas Cove Jetty, Fishery Wharf, and petroleum-related jetties reported multiple vacancies, signalling inefficiencies in port operations and infrastructure usage. 

Vacant terminals and underutilised berths continue to raise concerns among stakeholders, especially as the federal government pushes for economic diversification and enhanced agricultural production. 

Historical data indicates that sugar imports consistently peak during the first quarter of each year due to heightened demand from food manufacturing companies. Despite various government interventions aimed at boosting local sugarcane production, importation remains the dominant approach to meeting Nigeria’s sugar needs. 

According to experts, NACETEM’s ongoing efforts to commercialise innovative agricultural policies could play a critical role in achieving self-sufficiency if approved by the Federal Executive Council. Moreover, the Federal Government’s push for economic diversification and technological advancement must be integrated with port development strategies to enhance local sugar production. 

Industry players acknowledge that achieving self-sufficiency in sugar production, will require concerted efforts from government agencies, private investors, and technological institutions.

The Executive Secretary/CEO, National Sugar Development Council (NSDC),  Kamar Bakrin, said the time was ripe for potential local and foreign investors to key into the local production of sugar in the country so as to benefit from the huge $7billion Africa’s export market.

Bakrin told Business Editors in an interactive session in Lagos that the existence of a large and growing domestic demand which is put at about 2million metric tons per annum is one of the reasons the business is viable and profitable.

He added that the export market within Africa is vast, promising and wide enough for investors in Nigeria to explore, saying while the Nigerian sugar market is valued at $2billion, the export market in Africa is even bigger and worth $7billion.

Bakrin also spoke about the macro-economic environment, especially currency exchange rate, which he said has made local production more competitive and importation more challenging.

In his words: “The economics are compelling with high Net Present Value (NPV) and Internal Rate of Return (IRR) at attainable scale, and available financing that matches the business need.

“Investing in the Nigerian sugar industry is operationally feasible with access to land in secure parts of the country, and available global expertise to support local projects.”

He said this was the appropriate time for investors to stake their money in the business, because as he put it, “there is a strong incentive framework and the government is committed to creating investment-friendly legislation to aid investments that tap into its Backward Integration Plan (BIP).”

He noted that the present is stable, while the future is secure for the industry due to a host community integration model introduced by the Council in which all stakeholders at the community level benefit immensely from sugar projects, thereby ensuring sustainability.

Bakrin said in the new model, operators of sugar projects must not only reserve a certain percentage of their investments for massive host community development in terms of schools, clinics and roads, they are also required to reserve job quotas at managerial levels for the communities and their catchment areas.

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He added that the sugar subsector has a wide variety of high-value products that can be produced, such as ethanol, bioplastics and packaging materials, among others.

 Bakrin who was appointed by President Bola Tinubu in October last year, said he and his team have been working on putting the right measures and policies in place to drive Nigeria towards self-sufficiency in sugar production in the next eight years.

“We are taking deliberate action to accelerate local production and we have declared 2025 as the year of acceleration for sugar development in the country. We are raising a pool of appropriate funding of the right quantum, cost and tenor to create capacity for this development.

“We are also driving and implementing more aggressive expansion models by existing players, as well as leveraging the entrance of credible local and global business groups and establishment of commercial sugar cane growers to grow the sector.

“Internally, we are upgrading capacity for training manpower for the industry, creating local varieties, multiplying seed cane and driving best practices through extension services,” he stated.

Moody’s Ratings (Moody’s) has affirmed the Caa1 corporate family rating (CFR) of Dangote Sugar Refinery (DSR) Plc.

Concurrently, Moody’s has repositioned the national scale rating (NSR) to Ba1.ng from Baa3.ng. The rating outlook has been changed to stable from positive.  DSR is the largest Sub-Saharan African sugar producer and refiner based in Nigeria.

The global rating agency attributed the change to the negative impact of the Naira devaluation on the operations of DSR.

According to the agency, the affirmation of DSR’s Caa1 CFR and change in outlook to stable with the repositioning of the NSR to Ba1.ng reflects Moody’s view that the company’s raw material import business model continues to be negatively affected by the sharp devaluation of Nigeria’s currency, the Naira, against the US dollar during the last 12 months.

Moody’s Ratings noted that the currency devaluation has deteriorated DSR’s liquidity position and materially increased its letters of credit (LoC) in Naira terms, weakening the company’s credit profile.

It should be noted   in June 2023, the Central Bank of Nigeria (CBN) announced the unification of its multiple foreign exchange windows, merging all official rates into its Investors and Exporters window which has significantly devalued the Naira, particularly in June 2023 and February 2024 from around 460 Naira per USD in June 2023 to around 1,500 in February 2024.

According to Moody, factors considered in the rating of DSR include the positive industry fundamentals supported by government regulation and Nigeria’s demographic and societal trends,  DSR’s market positioning as Nigeria’s largest manufacturer and seller of refined sugar, low levels of Moody’s adjusted debt of NGN62 billion excluding letter of credit; and  track record of adequate operating margin of 18 percent  over the last five years and capacity to pass through additional costs albeit with a lag.

Also, the ratings , according to the agency, reflected the company’s exposure to Nigeria, a country that has high social, political, economic and regulatory risks;  high exposure to foreign currency risk exposure due to hard currency imports and local sales under a depreciating naira currency scenario; exposure to commodity price risk volatility through raw material imports of sugar; high reliance on letters of credit of N420 billion as of March 31, 2024, which are interest bearing and used for hard currency working capital financing; and  weak credit metrics driven by a weaker than expected operating performance and large foreign currency losses.

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“The stable outlook reflects our expectation that DSR’s volumes will grow towards the levels achieved in 2022 over the next 18 months. The stable outlook also assumes that the company’s outstanding letters of credit with banks will be rolled over and not increase in size,” Moody’s Rating stated.

The management of DSR stated it has taken positive actions against the headwinds of the currency situation in Nigeria by focusing on the backward integration plan for sugar production in Nigeria.

According to DSR, it has made significant investments and will continue to grow its size of the local sugar production capacity.

“Given the devaluation of the currency which has made locally produced sugar to have significant profit margin compared to imported sugar, DSR has intensified production activities at its Numan and Nasarawa sugar plantation.