Business
Dangote Sugar pushes to cut import by 40%, creates 30,000 jobs
BY EMEKA EJERE
Dangote Sugar Refinery (DSR) is increasing investment in its backward integration projects in order to plug the annual sugar imports estimated at N425bn.
Last week, the management of the refinery announced that it was set to reduce the importation of sugar into the country by 40 per cent.
The President, Dangote Group, Aliko Dangote, said in a statement that the company was embarking on Phase II of its sugar project, which would cover over 100,000 hectares to make the sugar plant the largest in Africa, paving the way for employment of over 30,000 youths.
Dangote said the integrated sugar complex would be located in Tunga, in the Awe Local Government Area of Nasarawa State, and comprises 60,000ha sugar plantation and two sugar factories with the capacity to produce 430,000 tonnes of refined white sugar per annum.
In 2021, sugar imports into Nigeria reached N425bn, according to estimates by the National Bureau of Statistics. But DSR is planning to end the huge import bill by expanding sugar plantations and setting up factories to save Nigeria’s scarce foreign exchange as well as create millions of jobs.
Foreign exchange saver
The DSR 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 tonnes 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.
According to data generated by the National Sugar Development Council (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.
Accordingly, Dangote 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.
Addressing shareholders, at the company’s 15th yearly general meeting held in Lagos, Dangote said allowing for distortions in the sugar master-plan framework would adversely affect the target of the nation attaining self-sufficiency as projected.
According to him, the National Sugar Master Plan could save Nigeria between $600m and $700m yearly if executed as designed.
“If the national sugar master plan is followed strictly and the players all follow the rules, the country will be better for it,” Dangote had said.
During a tour of Dangote’s Savanna Sugar Company Limited in Adamawa last year, the Minister of Industry, Trade and Investment, Otunba Niyi Adebayo said, “What we’ve seen so far from all the plantations we’ve been to are very impressive. We are impressed with the level of work they are doing.”
General Manager for the BIP, Dangote Sugar, John Beverley, said when the factory was fully operational, it would have the capacity to crush 12,000 tonnes of cane per day, while 90 megawatts of power would be generated for both the company’s use and host communities.
A source within the company, who spoke under the condition of anonymity for lack of authority to speak, told Business Hallmark that everything is in place for the company to “begin to effect the 40 per cent import cut”. He, however, was not specific on the expected date of takeoff.
Defying the storms
The company’s commitment to the policy is yielding result as reflected in its financials for the year ended December 31, 2021.
Despite the disruptions in the economy occasioned by the COVID-19 pandemic and the adverse impact of the perennial Apapa traffic gridlock, the company recorded an increase in production volume which rose by 9.2 per cent to 811,962 tonnes from 743,858 tonnes, in the corresponding period of 2020.
It stated that the Group’s revenue of N276.50bn for the full year represents an increase of 28.8 per cent over N214.3bn recorded in 2020, while the sales volume rose by 5.7per cent to 773,341 tonnes compared to 731,701 tonnes in 2020. It also showed that the company recorded a gross profit of N50.21bn and profit after taxation of N22.05bn.
The Group Managing Director, Dangote Sugar Refinery, Ravindra Singhvi, said “Our impressive performance in the year demonstrates our resilience in the face of prevalent challenges, which rightly reflected in strong top-line growth shown in the financial results.
“During the year under review, we concluded the integration of our new 50kg packaging for the fortified and non-fortified sugar bags in the market.
“This refreshed our brand personality and led to a deeper connection to the Dangote Sugar brand among our valued customers and consumers while sustaining our market presence and leadership with the product quality.”
