The Central Bank of Nigeria has designated Dangote Sugar Refinery, Bua Sugar Refinery and Golden Sugar Company owned by Flour Mills of Nigeria Plc as the sole importers of sugar.
In a circular published on its website, the CBN said the three companies would have access to official foreign exchange, but with the bank’s express approval.
The CBN hinged its reason for selecting the aforementioned sugar manufacturers on the fact that the three companies had made reasonable progress in achieving backward integration in the sector.
It explained: “The Federal Government of Nigeria under the National Sugar Development Council established the Nigerian Sugar Master Plan to encourage and incentivise sugar refining companies in their Backward Integration Programme (BIP) for local sugar production.
“Accordingly, the underlisted three companies, who have made reasonable progress in achieving backward integration in the sector, shall only be allowed to import sugar into the country.”
“Authorised dealers shall not open Forms M or access foreign exchange in the Nigerian foreign exchange market for any company or the three listed above for the importation of sugar without prior and express approval of the Central Bank of Nigeria,” the bank said.
The 16 July statement was signed by Dr. S.O. Nnaji, director trade and exchange department.
It reiterated that it is charged with the mandate of monitoring the implementation of the backward integration programmes of all the companies in the sector.
Nigeria’s National Sugar Master Plan (NSMP) was designed to attract over $1 billion annually in local and foreign direct investments and create an estimated 107,000 jobs over the first ten years.
In April, the CBN had said it would no longer provide foreign currency for importers of sugar and wheat as the country tries to conserve dollar reserves and encourage local production.
Its aim is to raise local production of sugar, to enable the country attain self-sufficiency; stem the tide of unbridled importation; create huge number of job opportunities and contribute to the production of ethanol and generation of electricity.
Additionally, the plan estimates that demand for sugar would have reached the 1.7 million metric tonnes (MMT) mark by 2020. Therefore, in order to achieve this, the NSMP estimates that the country would need to establish some 28 sugar factories of varying capacities and bring about 250,000 hectares of land into sugarcane cultivation, over the next 10 years. The bulk of this investment is expected to come from private investors.
The central bank justified its volte-face decision by saying the three firms, while still falling short of meeting demand, had made “reasonable progress” in producing refined sugar locally.
In 2015, the bank restricted access to foreign exchange for 41 banned items.
It has gradually added to the list since then.
The justification for the sugar sector road map, among other factors, stemmed from the huge amount the country was spending annually on sugar importation; that significant investments had been made in developing sugar refineries, all of which were then relying on imported raw sugar; and poor complementary investments in sugarcane plantations.