Sugar Surge in Nigeria

Efforts by the Government to curb importation of sugar has failed as report shows that Nigeria currently spends N57.2 billion on sugar importation.

Consequently, the Government’s poor protection of the local industry is stifling Nigeria’s sugar output, thereby leading to increased reliance on importation.

What measures were taken: In order to curb importation, the Government created incentives to boost domestic production of sugar which include the following: a five-year tax for investors in the value chain, 10 percent import duty and 50 percent levy on imported raw sugar, as well as 20 percent duty and 60 percent levy for imported refined sugar.

However, despite the incentives, current local production is just seven percent of the total consumption demand.

Heavy importation is affecting the Government: In 2012, the Nigerian Government created the Sugar Master Plan aimed at boosting domestic production of sugar to attain self-sufficiency by 2020. The plan also aims to contribute to the production of ethanol and the generation of electricity.

However, in view of recent developments, it appears Nigeria will not be able to meet up with its target by 2020 as importation rate keeps going high.

Factors responsible: According to several reports, factors that caused the decline in the production of sugar range from poor funding to insecurity in some of the sugar-producing areas.

A closer look at how this affects local industry: Recall that Nairametrics reported that Dangote Sugar Plc reported 44.8% profit decline for FY 2018. The company’s profit after tax dropped from N39.7 billion in 2017 to N21.9 billion in 2018. This is just as revenue dropped from N204.4 billion in FY 2017 to N150.3 billion last year, representing a 26.4 percent decrease.

Note that the activities of sugar importers and smugglers contributed immensely to this rather lacklustre performance by the company.

Deal book 300 x 250

The Government needs to secure the border: In order to curb excess importation, the Nigerian Government must secure the country’s porous borders and implement the ban on all goods and commodities that threaten domestic production.

Unfortunately, Nigeria is expected to import about 1.7 million tons of sugar to meet local demand. Data from the Nigerian Ports Authority (NPA)’s shipping position revealed that two terminals at the Lagos Port Complex have taken delivery of 285,299 tons or 16.78 percent of the projected 1.7 million tons imports. The imports are valued at N57.2 billion ($156.9 million).

Note that the commodity accounts for the largest import bill in sub-Saharan Africa.

Sugar importation rate over the years: Last January, the shipping data indicated that 95,600 tons of sugar were discharged at Apapa Bulk Terminal Limited (ABTL) and Greenview Development Nigeria Limited (GDNL) of the port.

At GDNL, Cressida berthed with 46,900 tons, while Pearl Island offloaded 48,400 tons at Apapa Bulk Terminal Limited of the port.

Also in February and March, 2019, SFL Humber and Glovis Maine offloaded 45,600 tons GNDL and 44,900 tons at GNDL respectively.
Florinda 1 and Ocean Eagle ferried 46,599.254 tons and 52,600 tons into ABTL respectively in April.

Brazil currently controls 80 percent of Nigerian market share. Between 2017 and 2018, no fewer than 3.69 million tons of sugar were imported into the country.

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