Nigeria Plans 2023 Sugar Self-Sufficiency Even as Woes Mount

LAGOS, Capital Markets in Africa: Nigeria, sub-Saharan Africa’s biggest sugar importer, remains on target to become self-sufficient in the sweetener in seven years even as foreign-exchange shortages and insurgents pose a risk to the goal, an industry body said.

Refiners Dangote Sugar Refinery Ltd., BUA Refinery Ltd. and Golden Sugar Co., which rely on raw-sugar imports from Brazil, joined a government program in 2013 seeking to meet annual demand of about 1.5 million metric tons within a decade. While output has reached just 14,000 tons so far this year, the target should still be met by 2023, according to the National Sugar Development Council, based in the capital, Abuja.

Progress has been slow because it takes a minimum of three years to get an average sugar refinery up and running, said Samuel Kwabe, acting executive secretary of the council. Efforts to build plantations and cane-crushing mills have been hurt by a shortage of foreign exchange due to lower prices and output of oil, Nigeria’s main export, making it harder to import plant components, he said. Fighting by Boko Haram Islamist militants in northeastern cane-growing areas has also made some territories less attractive to investors.

Facing Challenges
“The scarcity of foreign exchange and the insurgency in parts of the country have all affected the program,” Kwabe, whose agency is helping oversee the self-sufficiency plan, said in a Sept. 21 interview in the capital. “But we’re on course to meet the target.”

Dangote Sugar, based in Lagos and owned by Africa’s richest man Aliko Dangote, a Nigerian citizen, has 7,000 hectares (17,300 acres) of sugar cane under cultivation and bought another 33,000 hectares to be cultivated in the coming months, said Abdullahi Sule, the firm’s managing director. Brazilian specialists are helping Dangote, producer of all of Nigeria’s sugar this year, to expand capacity and while there have been setbacks, it plans to boost sugar output to 700,000 tons by 2021.

Getting access to dollars has been a challenge “since all components for setting up a sugar factory have foreign-exchange needs,” Sule said in an interview in Lagos on Sept. 23.

Sugar imports cost Nigeria, Africa’s most populous country with some 170 million people, at least $500 million a year, according to the council.

Boko Haram
While the dollar scarcity is a chronic problem caused by a 15-month peg of the naira to the greenback, which has persisted even since the local currency was allowed to float on June 20, the army has pushed Boko Haram out of many of the areas the militants occupied in the past year.

Nigerian sugar self-sufficiency is achievable, though it might take longer than the authorities plan, Tubonimi Lawson, a Lagos-based agricultural consultant on sugar farming, said by phone. “At the current pace of expansion, it would seem that the three companies in the forefront of the sugar program will reach at least 80 percent of the target by 2023,” he said.

BUA has a new mill able to crush 12,000 tons of cane daily and Golden Sugar’s Sunti factory, built on the ruins of a former state-owned sugar firm, has a daily capacity to crush 5,000 tons, Kwabe said. It produced 800 tons of raw sugar during a test run in May. Officials at BUA weren’t immediately available for comment and calls to numbers listed for Golden Sugar didn’t connect.

The council is also backing several smaller operators to set up cane plantations and mills, Kwabe said.

The African Development Bank’s president, Akinwumi Adesina, said Monday in Abuja the lender will invest in agriculture and finalize a $1 billion loan for Nigeria next month to help it shore up its budget.

Source: Bloomberg Business News