The Nigerian Sugar Masterplan, a roadmap aimed at achieving sugar self-sufficiency, has recently been renewed for another ten years. However, the plan faces significant challenges due to insufficient investments, which threaten its success. Investors have been hesitant to engage with this ambitious policy, which was intended to position Nigeria as a net exporter of sugar, increase foreign exchange earnings, and revitalize the economy. The reluctance to invest stems from the lengthy time required to recoup investments in the sugar industry and concerns over policy inconsistency. Experts have expressed concern that the Nigerian Sugar Masterplan (NSMP) has not attracted the necessary investment due to a harsh business climate, Nigeria’s declining economy, and inconsistent government policies.
In a 2021 interview with Vanguard Business Magazine, Emmanuel Ogoh, a former Deputy Director of Economic Research at the Central Bank of Nigeria, noted that the policy has struggled to remain on track throughout its existence, making the achievement of its ten-year targets seem unrealistic. The alarming volume of sugar imports into Nigeria and their detrimental impact on the economy prompted the administration of former President Goodluck Jonathan to draft the Nigerian Sugar Masterplan, based on a blueprint created four years earlier. The Federal Government identified sugar as the third most important commodity after rice and wheat in its strategic food policy, recognizing Nigeria’s potential to produce sufficient sugar to meet national demand and for export.
The comprehensive evaluation conducted to develop the roadmap for self-sufficiency in local sugar production encompassed various aspects of the sugar industry, including existing and potential estates, the structure and operating framework of the National Sugar Development Council, manpower development, research and development, finance, trade policy, and co-products of the sugar industry. However, many industry players feel disconnected from the Nigerian Sugar Masterplan due to the disparity between current realities and the benchmarks projected when the plan was formulated nearly a decade ago. By 2012, when the sugar masterplan was first established, Nigeria’s sugar production industry had significantly declined from its post-independence peak, supplying only about two percent of the country’s needs despite its competitive advantages.
According to Olusegun Aganga, the then Minister of Trade and Investment, this poor performance has deprived the country of the benefits associated with a vibrant sugar sector, including a significant drain on foreign exchange earnings, estimated at N101.9 billion in 2011, the loss of numerous employment opportunities, and food insecurity due to dependence on sugar imports. The decline of Nigeria’s once-thriving sugar production sector can be traced back to the Nigerian Sugar Company, Bacita, which was established in 1961 with an installed capacity of 40,000 tonnes. Although production began in 1964 and peaked at 35,000 tonnes in the 1973/74 season, it started to decline in the 1980s due to poor management. The Savannah Sugar Company Limited, which commenced production in 1980 with an installed capacity of 50,000 tonnes, also struggled with contract management, inadequate government funding, and crippling debt, achieving a maximum production of 23,000 tonnes in 1991/92.
By the late 1990s, the Nigerian government attempted to privatize both companies, ultimately selling them to new private owners. Efforts to establish additional sugar companies in Lafiagi and Sunti were unsuccessful, and a 1,500-tonne-capacity sugar factory in Hadejia, established by the Jigawa State government in 2005, remains incomplete. Numerous mini-sugar plants, with capacities ranging from 10 to 250 tonnes, were also established by private and state governments, but their combined production was negligible. The collapse of the nascent sugar industry adversely affected employment, poverty alleviation, and rural development, while draining the country’s foreign reserves. In response, the Federal Government directed the National Sugar Development Council to create a roadmap for self-sufficiency in sugar production within the shortest possible timeframe.
To address the downward trend in local sugar production, the government committed N170 billion to sugar production under the framework of the national sugar masterplan and intensified its backward integration policy to discourage indiscriminate sugar imports. However, by 2021, reports indicated that the masterplan was on the verge of failing to meet its ten-year targets. The departure of Latif Busari as the Executive Secretary of the National Sugar Development Council sparked controversy regarding compliance levels among beneficiary companies. Despite Busari’s assurances that the Federal Government’s strategy for achieving self-sufficiency in sugar production through the NSMP was still on track, stakeholders remained skeptical due to ongoing conflicts among major industry players.
With only three major investors in the sector over nearly a decade, the challenges facing the NSMP became evident. Recently, Zaccheus Adedeji, the Executive Secretary of the NSDC, announced that the backward integration program under the Nigerian Sugar Master Plan had attracted a total of $1 billion in investments as of 2022, primarily from leading companies such as Dangote Sugar, BUA Foods Plc, and Flour Mills of Nigeria. Adedeji acknowledged that the objectives of the NSMP had not been fully realized, largely due to the limited level of investment during the ten-year period. He noted that indigenous companies were compelled to increase their investments in the backward integration program for sugar plantation farming and processing, as some operators were reportedly establishing facilities that sustained the importation of bulk sugar, thereby undermining the government’s subsidy scheme aimed at promoting local production.
In response to these challenges, the Central Bank of Nigeria included sugar on the list of items ineligible for direct access to foreign exchange from the official window, restricting imports of cane or beet sugar and chemically pure sucrose. However, this created a potential monopoly situation for companies like Dangote Sugar and Golden Sugar, which were permitted to continue importing sugar after meeting their local content targets. In a late effort to align with the NSMP, Dangote Sugar Refinery announced significant investments in backward integration projects in Adamawa and Nasarawa States, aiming to reduce annual sugar imports. The company plans to produce 1.5 million tonnes of refined sugar from plantations covering 150,000 hectares across various sites. The CEO of DSR, Mr. Chinnaya Sylvain Judex, stated that the company targets a production capacity of 9,800 metric tonnes of sugar per day, in line with the National Sugar Master Plan’s goal of meeting the country’s annual demand.
Despite these efforts, the National Bureau of Statistics reported that Nigeria spent N425 billion on sugar imports in 2021, indicating a lack of substantial progress toward achieving self-sufficiency in sugar production over nearly ten years. Yinusa, the Head of Media at the NSDC, emphasized the council’s commitment to attracting investors to the sugar sector, acknowledging that the industry requires significant capital investment and a long gestation period before yielding returns. He stated, “Our objective is to see that Nigeria attains self-sufficiency in sugar production, and in doing that, the program 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. 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.”
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