Nigeria's sugar cane imports in 2021 reach N425.6 billion

Nigeria's sugar cane imports in 2021 reach N425.6 billion

Sugar cane imports in Nigeria increased by 61.31 percent to N425.6 billion in 2021, compared to N263.84 billion the previous year and accounting for 2% of the country's import bill.

This is according to data from the National Bureau of Statistics' foreign trade report (NBS).

This is the greatest amount spent on sugar cane importation since Nairametrics began keeping track of the figures.

A closer examination of the data reveals that the amount reported in the review year is 150 percent and 166 percent more than the N170.14 billion and N160.14 billion respectively recorded in 2019 and 2018. It's also worth noting that the sugar cane is primarily imported from Brazil, which is the world's largest producer and exporter of sugar.

According to the NBS, cane sugar, which is utilized in sugar refineries, is one of the primary goods consuming large FX resources in the country. Sugar cane, in particular, had the second-highest import value for food goods in 2021, trailing only durum wheat.

Background History

In December 2021, the federal government, in collaboration with the Sugar Backward Integration Program's operators, created a $73 million intervention fund for sugar irrigation in Nigeria to enhance the country's sugar production.

"The intervention involves the setting up of a 73 million-dollar irrigation fund for operators of the Sugar Backward Intervention Program," Nigeria's Trade Minister, Mr. Niyi Adebayo, said.

"The purpose is to help improve irrigation infrastructure on 10,000 hectares of sugar plantations in six locations: Numan (Adamawa State), Sumti (Niger State), Lafiagi (Kwara), Bacita (Kwara), Toto and Tunga, both in Nasarawa State."

He stated that the goal is to boost sugar yields dramatically so that the National Sugar Development Master Plan can be implemented, with the goal of Nigeria becoming self-sufficient in sugar production and possibly becoming a net exporter of sugar.

"This would save the country the hefty foreign exchange bill that it currently incurs for sugar importation," he said.

Vision

The Nigerian sugar sector has been consistently lagging in recent years, resulting in a supply deficit in the country that demands massive importation to close the gap.

Specifically, 93 percent (c.1.5 million metric tonnes) of the expected annual sugar demand of c.1.7 million metric tonnes in 2020 was imported.

The country's continued reliance on foreign imports is putting greater pressure on the exchange rate by depleting the country's foreign exchange reserves.

The federal government has attempted to achieve sugar self-sufficiency through the National Sugar Master Plan (NSMP), but the project has yet to make significant progress, as domestic supply still accounts for less than 10% of yearly consumption.

In a similar spirit, the Central Bank published a circular in 2021 indicating that only sugar refining enterprises that have made significant progress toward an agreed-upon backward integration plan will be permitted to get foreign exchange from the official window to import sugar into the country.

These companies were BUA Sugar Refinery Limited, Dangote Sugar Refinery, and Golden Sugar Company, according to the circular. Although the apex bank instructed authorized foreign exchange dealers not to provide foreign exchange to any company, including the three, without its prior and express consent.

Implication

Despite extensive efforts by the federal government and the Central Bank of Nigeria to promote growth in the sector and enhance local output, Nigeria remains far from self-sufficiency in sugar production.

Nigeria has been hit by a foreign exchange constraint in recent years, notably during the covid-19 outbreak, as inflows have plummeted, causing the country's reserves to plunge until new external borrowing was secured, bringing the reserve level back to over $40 billion.

Aliko Dangote, Africa's richest man and Chairman of Dangote Sugar Refinery, indicated in 2021 that rigorous adherence to Nigeria's sugar master plan might save the country $700 million in foreign exchange.