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Hopes on backward integration in sugar
FOLLOWING on the heels of self-sufficiency in local production of cement achieved by the country this year, the government is looking at sugar production as an area where the country can also achieve self-reliance in local production within the next few ears.
Towards
this end, the Minister for Trade and Investments, Dr. Olusegun Aganga, recently announced government’s plan to ban the importation of all sugar in retail packages and the importation of raw or brown sugar with effect from January 1, 2013.
Currently, Dangote Sugar Refinery and Bua Sugar Refinery are the two major investors in the sugar industry in the country. Both companies import brown sugar for local processing into white sugar. Both companies have also committed to backward integration especially by developing their own sugar plantations and investing in machinery for local production of brown sugar which they would refine into white sugar.
There are plans by at least two other investors in the country to start sugar refining in 2013. About 98 per cent of brown sugar refined into white sugar in the country is imported from Brazil. The implication of this is that Nigeria promoting economic development and job creation in Brazil by importing from that country what it can produce locally. This, among other reasons account for the stunted growth of the country over the years.
However, as it was done in the case of cement, in the new dispensation only investors who are committed to backward integration in the industry would be given licence to import certain quotas of brown sugar into the country to augment local production.
The government must also put in place an implementation monitoring team to ensure stricter implementation of brown sugar importation through quota allocation, setting enchmark on local production, evaluating how much of the imported brown sugar was used and the progress made in their compliance with set milestones and time-lines and enlargement of sugar-cane value chain players.
In addition to ensuring attainment of self-sufficiency in local sugar production, the new measures will also stem the increasing tide of high level of importation of sugar into the country and help conserve foreign exchange that would have gone into paying for such sugar importation.
Above all, backward integration in sugar production is expected to positively impact the country’s economy. For example, 1.8 million tonnes of sugar and 161.2 million litres of ethanol would be locally produced annually. It will create 37,378 permanent jobs and 79,803 seasonal jobs. It will also save the $65.8 million in fuel importation and between $350 million and $500 million that would have gone into sugar importation per year.
The measures, if faithfully implemented will benefit the country immensely and help in shoring up the economy of the country particularly in the area of conserving foreign exchange for the country, creating thousands of job opportunities for Nigerians and
ensuring self-reliance in local production of sugar for the country.
The government’s had in its budget for 2013 put import duty of 10% and a levy of 50% on raw sugar while refined sugar will attract 20% duty and 60% levy. It also put zero duty on machinery and spare parts imported for local sugar manufacturing and a five year tax holiday for sugar-cane to sugar value chain investors.
It is a waste of the country’s hard earned foreign exchange and lack of vision for the government to be promoting the economic growth of other countries through importation of food items and other essential commodities from those countries at the expense of Nigeria’s economy.
This is why every measure put in place by the government to ensure total sufficiency in local production is a measure in the right direction. It is also in line with what Nigerians have been clamouring for.
However, government must not be under any illusion that the implementation of the policy would be a smooth sail. If anything, implementation has always been the undoing of many lofty policies of the government in the past.
Therefore, it must guard against half-hearted implementation of the new policy. Just as it did in the implementation of backward integration in the cement industry, it must also ensure that the policy of backward integration in local sugar production is carried out to the letter.
