That N200 billion for sugar importation
It is hardly surprising that the level of demand for sugar and sugar products in Nigeria is quite significant.
The structure of manufacturing in the country and a whole spectrum of products from the sector depend on the use of sugar and its allied products as inputs. The goods here range from biscuits, confectionaries, medications, bread and other basic daily-need products including refined sugar.
Indeed, this demand for sugar was estimated to have grown successively by about seven per cent from about 450,000 metric tonnes in 1995 to the level where it is today. This is according to the National Sugar Development Council, NSDC, an institution established first by Decree 88 of 1993 and later by an amendment by an Act of the National Assembly in 2004 and further amended in 2015, to crystalise the idea of the development of the sugar industry in Nigeria. The establishment of the NSDC was necessitated by the underdeveloped state of the sugar industry in the country and the consequent low level of sugar production, which currently meets a paltry two per cent of local needs. This situation, of course, is unacceptable given the comparative advantage Nigeria has in sugarcane cultivation relative to many other countries worldwide.
Sugar cane as a crop is largely tropical and thus memories of the glory days of sugar factories in Bacita in Nigeria’s Middle Belt compared to the sorry state of sugar production in the country leaves a sour taste in the mouth of Nigerians.
The negative effects of this unpleasant state of affairs include the massive pressure this brings on the demand for foreign exchange for sugar imports. There is also a massive loss of employment opportunities for the teeming youth population as well as a growing state of food insecurity.
The quest to address these problems informed the Federal Government’s Nigerian Sugar Master Plan with a view to ensuring that local sugar production attains the level of about 1.7 metric tonnes mark by the year 2020, with implementation commencing in the year 2013. This target was expected to be attained by the establishment of numerous sugar factories in relevant parts of the country and bringing unto sugar cane cultivation and production about 250,000 hectares of land over a 10-year period, with the private sector expected to provide the needed financial capital.
However, five years down the line, the target set by this master plan has hardly been achieved. The bulk of sugar consumption in Nigeria presently, both for household as well as industrial use is imported, with its consequent impact on the demand for foreign exchange. Largely, the bulk of the sugar supply for the country’s domestic needs come from countries such as Brazil, Thailand and the United States of America. In the past six months, about 750,000 metric tonnes of raw sugar worth over N120 billion have been imported into the country with evidence indicating that this is merely a part of about 1.87 million tons booked for delivery this year alone. The sugar has been coming in even in spite of the extra costs attached to the imports such as the 80% levy by the National Sugar Development Council and a 10% import duty for raw sugar or a 20% import duty and 85% levy for refined sugar.
For the massive flight of foreign exchange and many other losses to Nigeria, the government should endeavour to stem the increasing sugar imports by returning to a faithful implementation of the master plan. Because the sugar imports come in through the Lagos ports, thereby constituting a huge menace of ports congestion and putting pressures on the road infrastructure in Lagos, the government may also wish to divert some cargo to the other largely less utilised ports to spread economic prosperity and enhance job creation in those regions.
Government’s efforts to address this problem, it must be acknowledged, have recently gone beyond the plan and targets of the National Sugar Development Council, NSDC. The Central Bank of Nigeria, CBN’s Anchor Borrower’s programme is one of such which targets that annual sugar production should improve by about 12.5% such that imports would continue to dwindle in this regard. However, this is still a far cry from the ideal. Currently, statistics indicate that the country produced only about 300,000 tonnes in the last four years despite the CBN Anchor Borrower’s programme. The spate of sugar imports has continued unabated and greater effort by government is necessary to address this critical problem which has implications for the food beverages and confectionary subsector of the country’s manufacturing sector.
One way out of this quagmire is the increase in government support for sugarcane farmers in the country and the enhanced provision of financial and other incentives for effective cultivation. This should also be extended to the sugar industries given that about 10% of the total sugar cane production ends up as raw sugar with lots of wastages evident. Alternatively, government may also need to begin to explore other alternatives to sugar use such as the development of other sweeteners that are healthier and less expensive both for industry and the households.
Against the background of the humongous amount of money the nation currently spends on importing sugar, trends and global best practices in this regard should be closely monitored to ensure that Nigeria makes the best use of its foreign exchange resources, adopts healthier alternatives and enhance the living standards of the people.
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