What Next After Meeting Sugar Refining Target?

It is commendable that the sugar industry in Nigeria has exceeded the refining target set by the federal government in the Nigeria Sugar Master Pan (NSMP). The strategic option now would be to focus on backward integration to provide sufficient raw materials locally that will feed the refineries. This is the way to go if the economy will save the hard dollars sorely needed and galvanise related industries and create much needed jobs.

The NSMP projects a consumption rate of 1.7 million metric tonnes by 2024, Nigerians are short of that level by only 200,000 metric tonnes as the current rate of consumption is 1.5million metric tonnes.

Before the master plan, Nigeria was importing refined sugar into the country. However, from the inception of the master plan till date, the country only imports raw sugar, and refines 100 per cent of her demand in Nigeria.

According to published reports, Nigeria’s refining capacity recently rose to 3.4mmt per annum from 2.75mmt, which was already 170 per cent over-capacity of import quotas to 210 per cent capacity. Sadly, most of the raw sugar is still being imported 7 years after the BIP commenced. This more than obviates the need to grow the crop locally. That need should signal a change in the competitive dynamics for industry players; as now is the time to move from just refining to backward integration.

Industry players must close the 95% raw materials import dependency gap if the industry must become internationally competitive and effectively cater for local consumption. It is what will allow them save foreign exchange, grow capacity and competence as well as create direct and indirect jobs to cancel some of the job shortages presently afflicting the economy.

Although the companies operating in that space have taken up the challenge, the commitment of Flour Mills of Nigeria’s Golden Sugar Company is worthy of mention for committing over N65billion to growing the crop, an investment reported to be the largest commitment under the master plan and also the first and only Greenfield initiative currently producing raw sugar in the country. Similarly, the company came up for mention by the National Sugar Development Council under the 2017 mid-term review, for commissioning a 50,000 tons/annum sugar factory at Sunti, Niger State, in 2016 and was rated the best performing Sugar BIP under the NSMP with a score of 58 percent.

But Golden Sugar and its peers can only achieve so much without government support. The operating environment and fiscal regime must be benign for success on this second and crucial phase of the industry life cycle within the framework of the master plan. It will also require transparent monitoring of BIP projects across the country, to entrench a commodity that government considers as the third most important commodity after rice and wheat.

We have confidence in government’s role in this regard since it targets making Nigeria the number one sugar exporting country in Africa.

With government as stalwart for the sugar companies, there is little doubt that the successes recorded in rice production will be replicated with sugar production.

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