The Nigerian Sugar Masterplan, a road map to sugar self-sufficiency, was recently renewed for another 10 years. However, insufficient investments may once again derail the plan, writes EDIDIONG IKPOTO
The Nigerian Sugar Masterplan may just be another failed policy, as it is currently being threatened by insufficient investment.
Investors have failed to buy into the lofty policy, which was designed to make the country one of the net exporters of sugar in the world, increase its foreign exchange earnings and help revamp the economy. They have not keyed into the Sugar Masterplan because it takes some time to recoup the investment in the sugar industry and fear of policy inconsistency.
Many experts also expressed worry that the NSMP did not witness a significant injection of investments due to the harsh business climate, Nigeria’s dwindling economy and policy inconsistencies on the part of the government.
Speaking with Vanguard Business Magazine in a 2021 interview, a former Deputy Director, Economic Research at the Central Bank of Nigeria, Emmanuel Ogoh, said that the policy has been struggling to stay on track almost throughout its lifespan while chances of achieving the set targets within its 10-year timeline seemed unrealistic.
Disturbed by the alarming volume of sugar imports into the country and the damaging effect this was having on the Nigerian economy, the administration of former President Goodluck Jonathan had drafted the Nigerian sugar masterplan, following a blueprint designed four years earlier.
As a precursor to what eventually became the Nigerian Sugar Masterplan, the Federal Government said it considered sugar as the third most important commodity after rice and wheat in its strategic food policy. This also followed the rationale that Nigeria has the reservoir of land, water and human resources to produce sugar in sufficient quantity to meet national demand and for export to earn foreign exchange.
It was against this backdrop that the study to evolve a roadmap for self-sufficiency in local sugar production in the country was conducted. The scope of work covered a comprehensive evaluation of all facets of the sugar industry including existing and potential estates, the National Sugar Development Council’s structure and operating framework, manpower development, research and development, finance, trade policy, co-products of the sugar industry, etc.
But for many industry players, the Nigerian sugar masterplan does not particularly resonate with them, because of the gap between today’s reality and the benchmark that was projected when the masterplan was formulated about a decade ago.
By 2012, when the sugar masterplan was first framed, the country’s sugar production industry, having peaked shortly after independence, had significantly plummeted from the lofty heights it once attained to an almost comatose state. It was only able to supply about two per cent of the country’s needs, in spite of its comparative and competitive advantages for sugar production.
According to Olusegun Aganga, the then minister of trade and investment, this lacklustre performance had deprived the country of all the benefits derivable from a vibrant sugar sector. Chief among these was the annual drain on the country’s foreign exchange earnings put at N101.9bn in 2011, the loss of hundreds of thousands of employment opportunities for skilled and semi-skilled labour and food insecurity arising from sugar import dependence.
But how did Nigeria fall from such a strong position to basically grasping at straws? How did a once vibrant sugar production sector tumble from a place of strength to desperation?
Available records showed that the Nigerian Sugar Company, Bacita, incorporated in 1961 with an installed capacity of 40,000 tonnes, was the first integrated industrial sugar factory established by the government. Actual sugar production started in 1964 and it attained the highest production of 35,000 tonnes in 1973/74. Production activities at the factory started to decline in the 1980s due to poor management.
The second was the Savannah Sugar Company Limited, Numan, which started production with an installed capacity of 50,000 tonnes of refined sugar per annum in 1980/81. It achieved its highest production of 23,000 tonnes in 1991/92. From its inception, SSCL was hampered by poor contract management, poor government funding and crippling debt.
By the late 1990s, the Nigerian government had moved to privatise the two companies. They were eventually sold to new private owners. Attempts by the government to establish other sugar companies at Lafiagi and Sunti never really got off the ground. The Jigawa State government also established a 1500tcd sugar factory at Hadejia in 2005 but never completed it to date. In addition, many mini-sugar plants with capacities ranging from 10 to 250tcd were established by both private and state governments but their combined production was insignificant.
The collapse of the nascent sugar industry had consequent adverse effects on employment, poverty alleviation and rural development and constituted a huge drain on the country’s foreign reserves. The urgent need to reverse the trend made the Federal Government direct the National Sugar Development Council to develop a road map to self-sufficiency within the shortest possible time frame.
The implication of this downward spiral meant that urgent steps needed to be taken to shore up local production of sugar on an integrated scale. The government, on its part, has committed funds to the tune of N170bn to sugar production in the country under the framework of the national sugar masterplan. It had also doubled down on its backward integration policy to discourage indiscriminate importation of sugar.
By 2021, reports had emerged that the masterplan, which had been running for almost a decade, was on the brink of missing its ten-year target. With the change of guard, which saw the exit of Latif Busari as the Executive Secretary of the National Sugar Development Council, much controversy had rented the air over the level of compliance by beneficiary companies.
Busari, on his part, had assured that the Federal Government’s strategy to achieve self-sufficiency in sugar production through the NSMP was still on track. But this did little to convince stakeholders who were concerned about the infighting among major industry players.
The rift was expected, given the volume of resources invested by these big guns, who had a vested interest in the backward integration programme of the Federal Government. But this was just the first indicator of the investment challenges faced by the NSMP. With only three major investors in the sector for almost 10 years that the sugar masterplan has been in place.
While speaking recently on the Federal Government’s plan to renew the recently expired 2012 masterplan for another 10 years, the Executive Secretary of the NSDC, Zaccheus Adedeji, disclosed that the backward integration programme under the Nigeria Sugar Master Plan had recorded a total of $1bn investments as of 2022. The investments, he said, were made by the bigwigs in the sugar production industry, which comprised Dangote Sugar, BUA Foods Plc and Flour Mills of Nigeria.
Adedeji admitted that the objective of NSMP has not been fully achieved; and it couldn’t have been, not with the level of investments recorded during the 10-year period.
According to him, the NSMP has had to force indigenous companies to significantly raise investments in backward integration programme in sugar plantation farming and processing.
This, of course, stemmed from the fact that some operators in the sub-sector were said to be setting up facilities that appear to be sustaining the importation of bulk sugar, thereby, abusing the subsidy facility set up by the government to ensure the availability of the product while efforts were intensified locally to bolster local production.
To address this, the Central Bank of Nigeria included sugar as part of the items which are ineligible to access foreign exchange directly from the official window. Cane or beet sugar and chemically pure sucrose are also on the list of prohibited or restricted imports.
However, this created a problem of potential monopoly for the likes of Dangote Sugar and Golden Sugar which were allowed to continue importing sugar, having met their targets in local content.
In what appeared to be a late move to align with the NSMP, last year, Dangote Sugar Refinery said it was pumping billions of naira in backward integration projects in Adamawa and Nasarawa States in order to plug the annual sugar imports.
The investments, the company said, were expected to boost the country’s quest for self-sufficiency in sugar production as the country plans to produce 1.5 m tonnes of refined sugar from sugar plantations covering 150,000 hectares of land across various sites.
Speaking with The PUNCH in Numan, the Chief Executive Officer, DSR, Numan, Mr Chinnaya Sylvain Judex, said the company was targeting to produce 9,800 metric tonnes of sugar per day at the end of the current expansion.
He noted that this was in line with the National Sugar Master Plan, targeted at meeting the country’s 1.5 million metric tonnes of annual demand in the country.
He disclosed that the company was aiming to commission a boiler and a turbine by October this year to produce 6,000 tonnes of cane per day, noting that there would be an addition of 3000 hectares per year.
The move by Dangote Sugar, which came almost towards the end of the 2012 master plan, meant that nothing significant had been done to plug the billions of naira expended on sugar imports into the country.
Meanwhile, the National Bureau of Statistics disclosed that the country spent N425bn on sugar imports in 2021. Many stakeholders believe this shows that the country has not made substantial progress toward achieving self-sufficiency in sugar production despite spending billions in almost 10 years on the project.
While speaking exclusively with The PUNCH, the Head of Media at the NSDC, Yinusa said that the primary focus of the council, having provided the platform for sugar development in the country, is to bring investors who would key into the idea.
According to him, the sugar business one which requires a long gestation period before yielding returns on investment, and this has often deterred potential investors.
He said, “Our objective is to see that Nigeria attains self-sufficiency in sugar production, and in doing that, the programme has to be holistic. We have to look at a number of factors responsible for why we still import sugar into Nigeria.
“The sector is open to willing investors. Our doors are open and we welcome investors into the sugar sector. The guys on the ground cannot do it alone. The sugar sector is a capital-intensive sector.
“So, many people are afraid of putting their money because it will take time before it yields returns, but those who have mastered the business very well know that the sugar business is a gold mine.”
