Nigeria plans a huge jump in domestic sugar production over the next six years to cut dependence on imports and satisfy growing demand from a population with rising incomes but still faces major challenges such as poor infrastructure.
The government is eager to make Nigeria self-sufficient in sugar by 2020 to cut its $11 billion-a-year food import bill and has announced plans to spur investment in domestic output.
It is targeting annual production of 1.7 million tonnes of sugar by 2018, a huge increase from the paltry 40,000 tonnes produced in 2012/13, a report by Ecobank said.
Sugar production in Nigeria has been neglected over the past half century as investors poured money into the oil industry, but the government’s eagerness to revive the farming sector and reduce the country’s dependence on oil could bode well for sugar.
“Nigeria has abundant natural resources actually to support sugar growth, but it was abandoned down the line because Nigeria had too much (focus on) oil,” Abdullahi Sule, Managing Director of Dangote Sugar Refinery, told an International Sugar Organization (ISO) conference.
Nigeria consumed about 1.2 million tonnes of sugar in 2012/13 and consumption is expected to reach 1.5 million tonnes by 2020, according to the Ecobank report.
But Edward George, head of soft commodities research at Ecobank, said consumption was rising fast and could well exceed his initial forecasts. “It’s finger in the air stuff but I would not be surprised if it (consumption) was 2 million tonnes by 2020.” Nigeria’s growing urban population and rising income levels are likely to drive demand for sugar in the coming years, as urban populations tend to consume more sugar than rural ones.
Some hope increasing Nigeria’s sugar output could not only help the country meet domestic demand but also turn it into a major exporter.
“A lot of those countries (in west Africa) are going to be relying on Nigeria,” Sule told Reuters after his speech last week. But George said this was ambitious, as meeting Nigeria’s growing domestic demand was already likely to be a huge feat.
“To suggest it would be the supplier of the region…I think that’s very unlikely.”
There are investment plans in the pipeline, but it is not clear whether they will be enough to ramp up production to reach the government’s targets. Dangote said in September it would invest $1.5 billion in sugar cane while its competitor Flour Mills of Nigeria also announced plans for investment in sugar production. However, Nigeria’s poor infrastructure will remain a major barrier to the expansion of sugar production.
“It will take long term and huge investment in public infrastructure and human/material resources for the country to catch up with the current and fast growing demand,” the U.S. Department for Agriculture said in a report.
