Nigeria’s sugarcane imports soar to 425.6 billion naira in 2021
Nigeria’s sugar cane imports jumped 61.31% to N425.6 billion in 2021 from N263.84 billion spent the previous year and accounting for 2% of the country’s import bill during the year in question.
This is according to data tracked by Nairametrics from the Foreign Trade Report, published by the National Bureau of Statistics (NBS).
According to the data, this is the highest amount spent on importing sugar cane since Nairametrics started tracking the figures.
A closer look at the data shows that the amount recorded in the base year is 150% and 166% higher than the 170.14 billion naira and 160.14 billion naira recorded in 2019 and 2018 respectively. I should also add that sugar cane is mainly imported from Brazil, which is a major producer and exporter of sugar in the world.
Cane sugar, which is used for the sugar refinery, as reported by the NBS, is one of the main items that gobbles up significant scarce foreign exchange resources in the country. Notably, sugar cane engulfed the second highest import value for food products in 2021, only surpassed by durum wheat.
- Nigeria’s sugar production industry has continuously lagged in recent years, which in turn creates a supply gap in the country and requires huge imports to fill the gap.
- Specifically, of the estimated annual demand of around 1.7 million metric tonnes of sugar in 2020, 93% (around 1.5 million metric tonnes) was imported.
- The continued dependence on foreign imports has a negative effect on the country’s foreign exchange reserve and, therefore, puts increased pressure on the exchange rate.
- The Federal Government, through its National Sugar Master Plan (NSMP), has made efforts to achieve self-sufficiency in sugar, but the project has yet to show impressive progress as local production still accounts for less than 10% of annual demand.
- In the same vein, the Central Bank issued a circular in 2021 stating that only sugar refining companies that have made significant progress in achieving an agreed backward integration plan will be allowed to source in foreign currency from the official window to import sugar into the country.
- According to the circular, these companies were BUA Sugar Refinery Limited, Dangote Sugar Refinery and Golden Sugar Company. Although the apex bank has instructed authorized currency dealers not to supply currency to any company, including the three companies, without its express prior approval.
Recall that the federal government and the operators of the upstream sugar integration program launched a $73 million intervention fund for sugar irrigation in Nigeria in December 2021 with the aim of stimulating sugar production in the country.
According to the Nigerian Minister of Commerce, Mr. Niyi Adebayo, “The intervention is the establishment of a $73 million intervention fund for irrigation, for operators of the upstream sugar intervention program.
“The objective is to support the development of irrigation infrastructure on 10,000 hectares of sugar plantations located on six sites in Numan (Adamawa State), Sumti (Niger State), Lafiagi (Kwara), Bacita ( Kwara) as well as Toto and Tunga, both in Nasarawa State.
He said the aim is to increase the sugar yield dramatically so that we can work within the framework of the national sugar development master plan, with a view to enabling Nigeria to become self-sufficient in sugar production and become possibly a net exporter of sugar.
“It would save the country the big bill it currently incurs in foreign currency for importing sugar,” he said.
What does that mean
- The significant increase in the sugar import bill indicates that Nigeria is still very far from achieving self-sufficiency in sugar production despite concerted efforts by the Federal Government and the Central Bank of Nigeria to stimulate the growth of the sector and improve local production.
- Nigeria has suffered from a foreign exchange crisis in recent years, particularly after the covid-19 pandemic, as inflows fell drastically, causing the national reserve to plummet until securing more external debt could reduce the level of the reserve to the region of $40 billion.
- Africa’s richest man and chairman of the Dangote Sugar Refinery, Aliko Dangote, said in 2021 that strict adherence to Nigeria’s sugar master plan can save the country from spending around $700 million in foreign exchange.