FG offers special incentives to fast-track backward integration in sugar industry

by | August 6, 2013 10:46 am

The Federal Government has said that it would provide special incentives for investors in the sugar industry, especially those that have keyed into government’s Backward Integration Policy in the sector.

Olusegun Aganga, minister of industry, trade and investment, said this during an assessment tour of existing facilities of major sugar refineries in Lagos weekend.

The refineries are Dangote Sugar Refinery, BUA Sugar Refinery and Golden Sugar Refinery.

However, Aganga noted that the incentives would be similar to what was given to investors who had keyed into government’s Backward Integration Policy in the cement industry, adding that the move would help the country to achieve self-sufficiency in sugar production for both domestic consumption and export.

The minister said, “We are fully aware that the processes of optimising the whole value chain in terms of moving from sugarcane to sugar take quite some time and require huge investment. That is why we have asked the operators of sugar refineries to provide us with their strategic and detailed action plans on backward integration in terms of what they want to do in 2013, 2014, 2015 and 2016. In addition, we want to see the practical demonstration of their commitment to the implementation of the policy.

“So, based on their demonstration of commitment to those things in their backward integration plans as it relates to moving from sugarcane to sugar production, we will give them special incentives. This is similar to what we did during the implementation of the Backward Integration Policy in the cement sector until we got to the point where we saw a significant increase in local cement production and we tied importation to production to bridge gap between supply and demand.

“By so doing, local production increased and importation was reduced drastically. That was how we were able to move from a country that was producing about two million metric tons of sugar to a country that has the capacity to produce 28.6 million metric tons of cement. It is the same principle and approach that we want to apply in the sugar sector.”

Aganga said that the development of the National Sugar Master Plan by the National Sugar Development Council had opened the sector for fresh local and foreign investments, adding that the Ministry of Industry, Trade and Investment was committed to working together with the state governments and the private sector to ensure the successful implementation of the Backward Integration Policy in the sugar industry.

He said, “The new sugar policy has opened up the sector for new investors to come in to invest in the sugarcane to sugar value chain. Currently, we have a number of interested investors from Brazil that are partnering with local investors and we already have two new green fields in addition to other interested investors that are doing their feasibility studies. This shows that the implementation of our policy of Backward Integration in the sugar industry is gaining momentum, and is in the right direction.

“Currently, Nigeria produces only about three percent of our local demand but our objective is not only to achieve self-sufficiency in sugar production but to become a major exporter in the global market. But most importantly, I want to see more commitment of the part of sugar companies in terms of aggressive implementation of our Backward Integration Policy for the sector which entails moving up in the entire value chain from sugarcane to sugar, production of ethanol and generation of power, among other things. We will do everything possible to assist them to succeed because they are very critical for job creation, revenue generation and economic diversification”.

The minister said that the successful implementation of the Backward Integration Policy in the sugar industry would unlock the potentials of the sector in terms of job creation, and wealth generation, stressing that the Federal Government was committed to providing the enabling environment for the growth and development of the manufacturing sector in line with the Nigeria Industrial Revolution Plan.

He said, “If we successfully implement our Backward Integration Programme, which is a very important component of the National Sugar Master Plan developed by the Ministry of Industry Trade and Investment, the sugar sector will be able to create more than 20 times the number of jobs they it has already created. Today, an average sugar refinery employs about 1, 400 people but if the Backward Integration Policy is well implemented it can employ an average of about 100,000 people.

“This is what makes sugar sector different from other sectors of the economy. It is in recognition of the importance of the sector that the government has introduced the Backward Integration Policy for the sector. But for the policy to be successful, we all have to work today as partners. Our job is to make sure that we create the enabling environment for them to do well through consistent manufacturing friendly policies.”