Government Privatises to Improve Sugar SubSector

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Government Privatises to Improve Sugar SubSector

26 April 2012

NIGERIA - In order to improve Nigeria’s sugar subsector, the Nigerian government (GON) decided to privatise all its sugar estates.

The National Sugar Development Council (NSDC) was set up in 1993 and its first task was to arrange the privatisation of the country’s nationalised sugar companies.

The rehabilitation of the estates has been very slow due largely to the huge capital required and lack of electricity/power to run sugar mills. The privatisation process was completed in 2008 and the NSDC next aims to implement an out-grower programme that will eventually run in all 14 sugar producing locations in the country.

However, to date, the program has only been launched at the Savannah Sugar Company Limited, which is currently the only sugar producer in Nigeria, and also at Josepdam Sugar Company. The rehabilitation of the other sugar estates is at various stages of development.

Nigeria’s sugar requirements are mainly met through imports of raw sugar from Brazil (95 per cent) that is refined locally. Currently, there are only two major companies refining sugar in Nigeria: Dangote Sugar remains the dominant player with an installed refinery capacity of 1.44 million tons; followed by the BUA Group with a capacity of 720,000 and they are also working on regenerating the infrastructure at Lafiaji in Kwara State; Flour Mills of Nigeria is doing the same in Sunti and has a second refinery coming on line in June 2012.

The combined refinery capacity to date is 2.3 million tons of sugar per year, far exceeding national consumption needs estimated at 1.45 million tons. Despite the overcapacity, it is reported that two other investors are planning on establishing addition sugar refineries, potentially with the aims at export markets.

Because of Nigeria’s beneficial tariffs on raw sugar (subject to a duty of just five per cent and exemption from the development levy) about 98 per cent of all imports come in the form of raw sugar and refined locally while the remainder is imported is refined sugar.