New sugar policy spurs local investors to action, set to reduce importation
By Franklin Alli
The newly introduced sugar policy, comparable to the backward integration policy in the cement industry, has been attracting applause from stakeholders in the sugar industry. The backward integration for the cement industry introduced in 2002 boosted local production of cement from 2.0 million metric tons per annum in 2003 to 18.5 million metric tons per annum in 2012. Additional 12 million metric tons are yet being expected from the expansion, while new plants are currently under construction across the country by the manufacturers.
The policy changed the country’s position from a leading importer of cement to that of being self-sufficient as well as a potential net exporter of the product. It is based on this success story that news of the new fiscal policy measure for the sugar sector recently introduced by the government, through the Central Bank of Nigeria (CBN) has started generating excitement among stakeholders in the sugar industry.
The new policy, which came into effect January this year, was convened through a circular signed by the CBN’s Director of Trade and Exchange Department, W.D Gotring.
The policy stated, “Any importation of equipment that will be used for the manufacturing of sugar is duty-free and there is a tax holiday for five years. Raw sugar (H.S Codes 1701.1100.00-1701.1200.00) shall attract an import duty rate of 10 per cent plus levy of 50 per cent, while refined sugar (H.S Codes 1701.9110.0-1701.9990.0) shall attract an import duty of 20 per cent plus a levy of 60 per cent.”
Reacting to this development, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) lauded the policy and described it as a bold step which if well implemented might have numerous multiplier effect on the sugar sector.
“If we don’t want to move backward, we should take our destiny in our own hands to reduce importation, save the naira and the exchange rate and give jobs to our people,” said Mr. John Isemede, Director General, NACCIMA.
According to him, the private sector strongly believes that with these incentives, new investors will come into the sector, while the existing ones might expand their operations and many people will be employed. “Those who are service providers, those who are into agro chemical and implements will have jobs,” he emphasized.
However, he cautioned that priority should be given to Nigerian companies and individuals, especially the five years tax holiday, so that “We do not leave our gate open for people to come in only to invest and after four, five years because you have given them pioneer status, they will relocate to neighbouring countries.
“There should be a road map and it should be properly monitored so that we do not solve one problem and create multiple other problems. So, the position of NACCIMA or the OPS is that it is a welcome development because it will create jobs, it will reduce the price of sugar, the agro-chemical, and even those that are providing the implements will have jobs. In addition, it will help the country to move from this present level of granulated sugar to cube and brown sugar, the one used for cake-making and things like that. So, it is a welcome development”.
He noted that existing companies in the sector, like Dangote Sugar Refinery and BUA Sugar Refinery are into pack sizes now, and they have big sugar cane farms already. “Dangote has a big farm in Numa, Adamawa State, which is the Savannah Sugar Company. So, they can now continue to invest more. You heard of Bacita Sugar, there is one in Hadejia and there is another one in Kwara. So, these are opportunities that we have to tap into to develop our economy,” he said.
Sameer Vaswani, Managing Director, A &P Foods Limited, manufacturers of HAANSBRO brand of biscuits, chewing gums and sweets, also hailed the policy.
Vaswani noted “The three main raw materials required for biscuit production are flour, sugar and palm oil. The long-term policy of encouraging local sugar cane plantations and growing of sugar cane locally is a fantastic policy but it needs time. Sugarcane planting and harvesting cannot just start overnight.”
In order to ensure availability of sugar cane, Dr. Latif Busari, Executive Secretary, National Sugar Development Council, Abuja, disclosed that plans are being concluded for the citing of 236,000 land banks in seventeen states for sugarcane production.
He identified the states to include Zamafara, Katsina, Kwara, Kogi, Jigawa, Imo, Edo, Cross River and Benue. Other states are Taraba, Ogun, Plateau, Ondo , Anambra and Adamawa.
According to him, the sugar industry is a promoter of investment, job and wealth creation and a tool for rapid rural development as it creates communities that are self- sufficient.
As an example, he said that in India, the sugar industry employs one million people directly and six million indirectly, stressing that it is what it will do for Nigeria.
He also said that the Federal Government should discuss with the state governments to make land available to existing and prospective investors for the project. He noted that the expected cost of implementing the project is about $3.1 billion, with the objective of raising local sugar production to attain self -sufficiency as in the cement sector, and stem the tide of importation of raw sugar as well as contribute to the production of ethanol and generation of electricity.
Minister of Trade and Investment, Mr. Olusegun Aganga, noted that compared to other West African countries, Nigeria produces two per cent of the 2.5 million metric tons of sugar required for its 165 million populations while over 75 per cent of raw sugar is imported and granulated by few investors in the nation’s sugar sector. This makes the county the lowest sugar producer in the region; this is in spite of the availability of abundant raw materials for sugar production across the country.
For instance, Benin Republic produces 25.6 per cent of its sugar requirement; Burkina Faso, 47 per cent; Cote d’Ivoire 54 per cent; Senegal, 48 per cent and Mali, 28 per cent.