BY EMEKA EJERE
Leading sugar producer, Dangote Refinery Plc, is riding on operational optimization and strong commitment to the Backward Integration Policy (BIP) of the federal government in the sugar industry to draw closer to a production target of 550,000 metric tonnes by 2024.
Meeting the 2024 target will be a bold step towards its bigger backward integration goal of producing 1.5 million metric tinnes per annum (MT/PA) from various sites across Nigeria, in 10 years.But more importantly, it will be a major boost to Nigeria’s aspiration to self-sufficiency in sugar production and a huge foreign exchange saver for the nation.
Its chairman, AlikoDangote, wants the federal government to faithfully follow through with the BIP in the sugar industry as the nation stands to rake in foreign exchange up to $700millon yearly from Sugar production self-sufficiency.
Dangote, who was addressing shareholders, at the company’s 15th yearly general meeting held in Lagos recently, said allowing for distortions in the sugar masterplan framework will adversely affect the target of the nation attaining self-sufficiency as projected.
The journey to the development of the Nigerian Sugar Master Plan (NSMP) commenced in 2008 under the administration of the late President Umaru Musa Yar’Adua.
The NSMP was crafted by the National Sugar Development Council (NSDC) for the development of a roadmap for the country’s sugar sub-sector in in response to the 3rd Presidential directive.The road map was designed to make the Nigerian sugar industry transform into a world class multi-product sugarcane industry that would meet the national sugar demand through local production.
It was approved and adopted in 2012 by the administration of former President Goodluck Jonathan. But its implementation took off in July 2013 with an estimated target of producing 1.79 million tonnes of sugar locally by 2020 amongst other objectives.
The then Minister of Industry, Trade and Investment, OlusegunAganga, who performed the signing-off ceremony that heralded its commencement in Abuja, had stated that the NSMP would mark the beginning of the nation’s journey towards industrialisation, in line with the Nigerian Industrial Revolution Plan (NIRP).
He had expressed delight that operators in the private sector have shown commitment to the implementation of the new sugar policy as some of them were currently discussing with the governments of Adamawa, Kogi, Kebbi, Sokoto and Taraba States.
Below the target
Unfortunately, Nigeria produced far less sugar in 2020 than it did in 1990 and repeatedly failed to meet its production targets, allowing massive importation to flourish for decades as domestic demand grew.
According to data generated by the NSDC, despite the government’s professed efforts to boost local production of sugar,the nation has relied almost entirely – over 98 per cent — on the importation of raw sugar for the last 30 years.
The figures show that successes recorded by industry leaders like Dangote, BUA, and Flour Mills of Nigeria have been anchored more on bringing raw sugar into the country where it is refined and sold, an economically costly model with negative implication for the Naira, job creation, and government revenue.
While Nigeria produced 41,478 metric tonnes of sugar in 1990, the figure fell to 38,597 metric tonnes in 2019. However, imports rose astronomically from 603,000 metric tonnes in 1990 to 1.6 million metric tonnes during the period, according to the data.
Changing the narrative.
In a bid to reverse the trend, the Dangote Group, through its Dangote Sugar Refinery Plc, is playing deep in the backward integration policy with the vision of ending the importation of sugar into the country.
It is targeting an annual production volume of 1.5 million metric tonnes of sugar from its backward integration investments in Nasarawa, Adamawa, Kogi, Kwara, Taraba and Niger States.
The signing of $700 million MoU, which covered the deed of acquisition, lease and development agreement between the Dangote Group and the Nasarawa State Government in 2017 lifted hope that Nigeria’s dream of becoming self-sufficient in sugar production would soon be realised.
AlhajiDangotehad explained at the event that the group’s integrated sugar complex in Tunga in Awe Local Government Area of NasarawaState would consist of 60,000 hectares of sugar plantation in its Phase One and two sugar factories with capacity to produce 430,000 tonnes annually of refined white sugar.
According to him, this represents about 30 per cent of the country’s consumption and would be the largest plant in Nigeria. It would also provide 30,000 jobs for teaming youths in the state. The project,he said, would be expanded to 100,000 hectares at the Phase II of the project to make the sugar plant the largest in Africa.
He added that the project would align the Dangote Group with the government’s policy of diversifying the economy by a renewed focus on the non-oil sectors like manufacturing, agriculture and solid minerals.
He said: “Agriculture is a key sector in the industrialisation of any nation. Therefore, the Dangote Group in support of the federal government’s transformation agenda in agriculture developed a sugar backward integration project plan targeted at the production of 1.5 metric tinnes per annum (MT/PA) from various sites across Nigeria, in 10 years.
“We are acquiring about 150,000 hectares for sugar plantation in Adamawa, Taraba, Nasarawa, Kwara, Kogi and Niger states.
“However, we intend only to concentrate on Adamawa, Taraba and Nasarawa States in the Phase I of the sugar project with a target to produce about 1.08 million tons of white sugar in the next five years,” adding that the group would establish integrated sugar mills, generate electricity, produce animal feeds amongst others.
The company’s commitment to the policy is yielding result as reflected in its financials for the year ended December 31, 2020.Despite the disruptions in the economy occasioned by the COVID-19 pandemic, the company recorded an increase in production volume which rose by 13.7 percent to 743,858 tonnescompared to 654,071 tonnes in 2019.
It posted a group turnover of N214.3 billion, 33 percent increase over the N161.1 billion in 2019, while also posting 6.9 percent rise in sales volume from 684,487 tonnes in 2019 to 731,701 tonnes in 2020.Shareholders at the meeting, approved N18.22 billion dividend, translating to N1.50 kobo per ordinary share of 50k each.
The company’s gross profit increased by 40.4 percent to N53.75 billion, compared to N38.29 billion in 2019 while group profit after taxation for the year increased by 33.2 percent to N26.70.billion against N22.36 billion in 2019, reflecting management’s unrelenting goal to deliver consistent shareholder value.
According to AlhajiDangote, the improved performance was attributable to operations optimisation strategy despite the disruption caused by civil unrest in the last quarter of the year.
“Our growth continued to benefit from the sustained efforts to drive customer base expansion and several trade initiatives and investments,” he said.
The Group Managing Director/Chief Executive Officer, RavindraSinghvi, said the sugar group continued the growth path with commitments to improve performance and generate value for all stakeholders, adding that the company would ensure all hands are on deck to meet the targeted 550,000tonnes projected to be achieved by 2024.
“Our backward integration goal is to become a global force in sugar production, by producing 1.5M MT/PA of refined sugar from locally grown sugarcane for the domestic and export markets.