We can achieve self-sufficiency in sugar production by 2023 – Busari

We can achieve self-sufficiency in sugar production by 2023 – Busari
October 24 20:48 2017

The cerebral and hardworking Executive Secretary of the National Sugar Development Council (NSDC), Dr. Abdul-latif Demola Busari, in this no-holds-barred encounter with Thinkers Magazine crew,  traces the long and tortuous  journey of the Nigerian Sugar Master Plan – from inception  in 2013 to 41.3 percent mid-term success rate in 2017, explaining how he and his team are defying the peculiar  challenges in the sugar industry to move the nation towards self-sufficiency in sugar production in 2023:

The Minister of Trade and Industry, Dr. Okechukwu Enelamah, recently said he was very impressed with the work you are doing here. Tell us some of the policies you have introduced that are capable of turning the fortune of the NSDC around?

Well, I don’t think we have done too fantastic a job yet. I think what the Minister saw and was referring to was the demonstration of our commitment and the various efforts we are making to tryand achieve our mandate. So, even though we haven’t gotten there yet, the Honorable Minister (our boss) and perhaps other people looking at us can say okay, there are challenges but the attitude you display towards resolving those challenges point to the fact that eventually you will succeed.It’s different from somebody who has similar challenges but what you see is non-challance, and a feeling of unseriousness and you say I don’t think he has the capacity to solve this problem. But when you see the other side and you notice that the person is trying his best grappling with the challenges,like we are all generally trying to do in the country, we have challenges and our leaders are trying to find solutions, I believe that gives the people hope. So far, we are trying to implement the Nigeria Sugar Master Plan by providing a level playing field to all operators in the sector and to show that the current administration is committed to achieving the goals of Master Plan, that is, ensuring that we achieve self-sufficiency in our sugar requirement within the allotted time frame.

The Nigerian Sugar Master Plan is in its fifth year of implementation. How can you describe the journey so far? 

Well, the Master Plan is the roadmap that was approved and adopted by the Federal Government in 2012 as a strategic framework that will lead us to self-sufficiency in sugar production. It has four simple objectives. One is to improve the level of sugar production locally until we achieve self-sufficiency; two, to reduce our over dependence on imported sugar because we are losing a lot of foreign exchange through it; three, through it, to create a huge number of jobs for Nigerians and four, and this is one thing that happens in all sugar industries all over the world, to generate electricity.  So, we want to through the implementation of the sugar Master Plan to generate electricity and contribute to ethanol production because today Nigeria is still largely depending on imported ethanol for all our needs. These are the four basic objectives and then it’s a ten-year journey and we started in 2013 and we hope that by 2023 we will reach where we are supposed to reach.

By 2023, we should be able to produce about 1.8 million metric tonnes of sugar annually which is what we estimated will be our demand by 2020 because the Master Plan was actually developed in 2010, but it took us two years to get stakeholders to buy-in into the implementation and eventually it was approved in 2012. Without the stakeholders’ buy-in, we wouldn’t have even gotten far at all. So it took us two years and we took our time to ensure all our stakeholders will join us in the journey, which effectively took off in 2013… so by 2023, we hope that we will able to produce about 1.8 million metric tonnes of sugar annually and we will be able to generate about 161 million litres of ethanol, generate over 400 megawatts of electricity, create 117,000 jobs for both skilled and unskilled people and both seasonal and permanent jobs and save Nigeria about 600 million dollars we annually spend on sugar importation. And if we are able to enact an Ethanol blending mandate where you mix ethanol with gasoline to use as automotive fuel, we would also make Forex savings on that too.  The Obasanjo administration started it, he had what we call the E10 Mandate that means you mix ten percent of ethanol with your gasoline. If we are able to implement that, since we depend on imported gasoline right now, we will also make some savings at least by that 10 percent; we estimated that to be about 68 million dollars annually. Now to be able to achieve all these, we will need to bring about 250,000 hectares of land under cane cultivation. We will also need to establish 28 sugar factories of varying capacities; of course we need to employ people that will do the work. So, these are the basic ingredients of the Master Plan.

Now how do we get this done especially when government is not going to be directly involved as an investor, which is actually one of the main challenge for us. The Master Plan has shared roles; it expects the private sector to put all the money down and provide technical expertise while the government will provide the enabling environment, including some incentives that will attract them to invest. Don’t forget we are dealing with a sector that even if you have all your funds and your technical expertise ready, and you have your land ready, it will still take you five to six years of continuous spending before you can see a grain of sugar come out of the project. You will only begin to recoup your investment probably after repaying the loan. This will take about ten years. The question is how many investors are willing to go into that kind of sector when you can invest in something less risky or that has a faster turn-around like government bonds or you can invest in trade, buy something and sell. So, few investors want to go to that kind of sector. It is capital intensive, it has long gestation period and it is fraught with agricultural risks. People compare it with cement but cement does not have the kind of risk we face in the sugar sector and as we go along in this discourse I will highlight some of these differences. For instance, when you plant your cane and you suddenly have a flooding event, that’s the end of it for the year and it happened just last week in Sunti. We had a forum in Calabar recently, which many of our stakeholders attended and I was asking the MD when the company plans to start the next crushing season, and he said February, but the following week after we came back, he just sent me pictures of the flood disaster?  All the cane they plan to mill in February had been cleared! So, the risks are there and that is why in many countries that are serious about going into the sugar production business, government has to be involved financially, at least with guarantees in addition to incentives. What I’m saying therefore, is that the journey has been rough, and the country’s slide into recession last year did not help. This much came out when we had the mid-term review.

During the recent midterm review, it was discovered that the NSMP only achieved 41.3 percent of its objectives, what are you going to do differently to change the story as we move closer to 2023?

What we intend to do differently and we actually highlighted some of them during the midterm review meeting are, one, we have asked the operators to submit fresh Backward Integration Programme (BIP) commitments. The first one they submitted formed the basis of the conclusion that we have only recorded about 41.3 percent success rate and you know it varies among operators; one scored 58%, others scored lower, the very low score was the one that brought the overall average down. So they have submitted fresh commitments for the second half which will cover from 2018 and 2023. We have also revised the guidelines under which they are going to be operating particularly by tying the sugar allocation they get to their performance on the BIP. The fact is that we are really constrained as a regulator because we don’t have much to use as leverage to get investors to commit besides the sugar importation quota. Of course we can go back and withdraw the incentives. But what we have is the current stick and carrot approach. Carrot is still the incentive; the stick is possibility of denying them import quota.  I am sure you know most of the sugar we consume are produced by our local refineries that depend on imported raw sugar.  They import most of them from Brazil, so we say now the only reason we will allow you to continue to import is for you to do certain things which if you don’t do, we will allow other people to import instead; so you have to sign backward integration and begin to implement and we will be assessing your performance on the basis of which you will get a quota. So we have revised the criteria and also fine-tuned the scores in such a way as to give weight to the two most important criteria for us which are actual sugar production and job creation. These twohave the highest weights which means the more you are able to do these ones, the more sugar you get. So that is the carrot and stick approach we are using.

But besides, we also need to address the challenges some of them face. When the teacher says your child doesn’t perform well in the school because he sleeps in class, you don’t just blame the child, you also need to address what’s happening at home; so you need to see if he is watching the TV till 1 am and then goes to school to sleep; you have to address those challenges and not just say I will beat you because you came 4th or 5th in the class. The operators mentioned the issue of flooding, when the operators of the Kainji and Jebba dams open the Flood Gate, when the water gets too high and it is going to destroy their own dams, they just open and this inundates all the flood plains and washes away all the installations. So we have gotten the particular operator that faces this problem to meet with the dam operators and the two of them have started talking to each other and share information. The operator is also gradually building the capacity to be able to mitigate the annual occurrence by building dykes.  But sharing information on early warning signals are key to solving this problem. If you know something is going to happen, you are in better position to prepare for it. We hope the two operators will cooperate to drastically reduce the impact of the flooding.

And then they talk about community hostility. We need to engage the communities to let them know that these investors are here ultimately for their good and interest because if you allow them to set up and operate factories in your communities, it is going to change the micro-economy of that place and everybody will benefit. There aemre also some challenges with access to land. We need to engage the state governments. This may be beyond us as a Council but maybe we can get the National Council of States to intervene; we are trying to explore that avenue. If all of us are saying we need to diversify our economy and we have identified agriculture as a  veritable tool to achieve this and then this is an agricultural project and we are having difficulty in accessing land, how do we do it? These are some of the things we are trying to do to change the narrative and we hope to achieve better results, as we engage different stakeholders.

On the challenges posed by access to land, do you think the National Assembly has a role to play in this in terms of amending the Land Use Act and other relevant laws?  

Well, the issue of the Land Use Act has been on forever; people have been asking for its  amendmentfor so long. I don’t know why it is so difficult because all of us are seeing the negative effect of that particular piece of legislation even on individuals. You want a land for your house and you apply to a state government and for ages, the C of O will not be out.  And the C of O is what you need to be able to access loans to build your house in other places but when it doesn’t come out what do you do? So I think the issue is important. Look at Dangote Group, we read a report that he went to another country and got land for free, so, why won’t he want to invest in that place? Back home, he had gone to a state government where he was asked to come and pay 2.5 billion naira! This is such a huge amount that would be better invested on the project itself, but he is being asked to pay that for the land. We need to put our money where our mouth is. If we say we want to diversify and we are lucky in the country to have the likes of Dangote, BUA, Flour Mills etc willing to invest inspite of the peculiar risks of the sector, I think access to land should be simplified. We are not even saying they should not paycompensation but it should be reasonable. It is not only Dangote who has faced that challenge; some of our other operators in Kwara, Jigawa, Adamawa have similar experiences. Let’s make land for agricultural projects easy, once the factory is on ground, what government will generate in terms of tax will be much more than all these things they are asking. I realise of course that as politicians with only four years to stay in office, they want the money immediately to fund their budgets. They perhaps think that before the huge tax revenues will start coming in, they may have left office but government is a continuum, people will still remember that during their time the factory was set up and it has continued to benefit the people.

The two chambers in the National Assembly have committees on Trade and Investment which cover your beat, have you gone a step further to engage them on this issue?

Well not particularly… because the issue of the amendment of the Land Use Act like I said has been on forever since around the late 70s when it came on board and I don’t see why we have not done away with it despite all the complaints about it. There must be some problems that mere mortals like us don’t understand. We feel since state governments are directly in charge of lands however, if we could directly talk to them it is better for us. But talking to the communities too will also help because if the local people just rise up against a project there will be a problem. It happened in Jigawa where the state government approved land for a project, and then some people rose up and said it’s a form of “land grab” by the Chinese Investor, which to me is like trying to give a dog a bad name in order to hang it. We therefore need to carry both along, both the state government that putatively has the control over land and the communities whose forefathers have been living and earning their livelihoods on the land for long. So we need to carry both along. And we are doing this through our sensitization programnes.

Sometimes we also directly approach state governments and request for land for sugar projects. The Master Plan lists the various locations in the various states, with details of the potential areas available, the potential sugar quantity the land can produce, the potential megawatts of power it can generate and the employment you can generate etc. Take a place like Sunti in Niger State, according to the Master Plan it has about 20,000 ha that can be used. So we will approach the Niger state government and say we have identified a place called Sunti in your state, can you give us the land, cede it to us and then we will do the pre-feasibility which is necessary because the fact that you have a large piece of land does not mean it will support sugar production.

So if the feasibility report is positive, we can then market it as a project to investors. We started it, we got about 4. We got 2 from Adamawa State and another 2 from Kogi state. The efforts we have made to get to other state governments have not been so successful, probably because they also have some other uses for the land we identified.  For instance, when wrote to Edo state government, they said that the particular place we identified was meant for a rice project not sugarcane. That’s what the Master Plan says we should do and which we have started doing so, if we see a land, we approach the state government. But it is better when the communities come to us and say we have this land and will like it to be used for sugar production.  We do get some of this also because we have been doing sensitization programme on all these issues across the states. So in that case, we first ascertain the size of the land because that is where it starts; sugarcane projects need a fairly sizeable plot of land. But you know if you stand inside two hectares, you think you are in a large area of land. So they come and say they have plenty of land, when we do our GPS reconnaissance, we get something else as a result. Some people came recently and said they had 36,000 hectares but when we got there we mapped only 2500 hectares! In this case, we encourage them to talk to people involved in arable crop like rice and maize farming as this will not be sufficient for sugarcane. But if the size is okay, we go and do feasibility.

What are your expectations from investors in the revised edition of the Backward Integration Programme? 

The expectation us high. You know the BIP plans were submitted by the operators themselves. The submissions contain some of the earlier projects too but they are re-committing to them and added some new ones too. Dangote Sugar is now going to do the expansion of its Savannah Sugar. They are going to have two other green field projects, one in Lau and one in Tunga. The one in Lau was where the company ran into a hitch before, but the issues have been resolved largely, and the government seems to be willing now. Tunga is a brand new one. Those are the three projects for Dangote Sugar. Golden Sugar justcompletedtheir Sunti project and they are proposing another one and they have asked us to look for land for them. BUA too has itsold project in Lafiagi and plans another new one. We have a total of about 8 projects in all. It’s a mixture of the old and the new projects. We also have a number of other green-field projects outside of the ones belonging to refineries. There is an old project in Hadejia and a new one coming up in Gagarawa, also Jigawa state and another in Gummi in Zamfara state. The important thing now is to get all these projects off the ground and running.

What’s the latest figure of the national demand for sugar and how has it been affected by the implementation of the NSMP?

In the Master Plan, we based all we are doing on the projected demand. There is a table in the Master Plan that shows the projected demand from 2012 to 2020 and amazingly it has been quite realistic. The projection we had for 2016 was 1.55 million metric tonnes and we actually consumed 1.56 million last year, which is very close. This year, we are projecting 1.58 million metric tonnes as consumption but the quota approved by Mr. President was 1.6 million metric tonnes.

In terms of local production, the number of milling facilities has not really changed. We have only one operating mill in the country, that’s the Savannah, the second one that just came up is Sunti Sugar Estate. That is the one I said was affected by flood in 2015, 2016 and now again in 2017. If not for the flood, that factory would have been producing now. We just hope the impact of the latest flood is not too serious.

What’s the significance of the sugarcane bio factory located in Ahmadu Bello University, Zaria, to the implementation of your mandate and why do we have only one in a big country like ours?

The significance is that we want to leverage on science, technology and innovation and bring them to bear on what we do in the industry. What the bio-factory does is to use cutting edge technologies, such as Tissue Culture techniques and the more advanced Temporary Immersion Bioassay also called TIBs– and so many other technologies that you could use either to develop new varieties or rapidly multiply the seeds. If you want to plant maize now, you can go to the market and buy corn and plant, it’s not like that for sugarcane because the seed for sugarcane is the stalk itself. The cane stalk has what we call nodes with the buds, that is the thing that germinates and grows when you cut the cane and put it in the soil. So, it is the cane itself that is the seed. Now, we do not have private seed companies that engage in cane seed production because of its peculiarity. For example, when you plant maize or rice or groundnut, if you harvest it as seeds and there are no takers, for some time you can keep it while you wait for buyers.  If eventually you do not get buyers you can eat it. For cane, you can’t do this. You cannot plant, cut and keep, the moment you cut cane; it begins to dry up because it is mainly water. So, seed companies don’t go into it for us. So as part of our service to the sector, we have established and maintain what we call cane nurseries where we plant and maintain them until somebody comes to say they need cane seed. So we go to our nurseries and cut and give them but we can’t give sufficient quantity, may be sufficient enough to plant one hectare or two and they can then keep multiplying and expanding to produce enough for their needs and that’s what they do in the industry. For example; Dangote’s Tunga project is 400,000 tonnes sugar per annum which is huge, the only other one like that in Africa is in Sudan. He is going to need about 60,000 hectares of land. But they just started a nursery of 50 hectares; it is from there that they will be cutting and expanding. From 50 to 500 and to 5000 just like that; that is how you multiply cane seeds, you do it for yourself on your nursery. You will be lucky if you get an agency like NSDC that just gives you something to start with. We now felt, if nobody comes at the end of the year, what happens to the canes we have grown with all that money spent, we just cut and discard, only government can continue to sustain that kind of waste no private person will do it. That is why we don’t have private seed companies for sugarcane. We have one nursery in Kadawa, one in Tsaragi each time new sugar investors come and we go and cut some to give them. Right now, we are distributing seeds to new projects in Goronyo and Ondo. So we now thought we should be able to do something about this waste. That’s why we set up the facility where we can rapidly multiply the cane seeds.An investor can approach the Biofactory to multiply particular cane seeds and they will tell you when to come back for them, no more waste, you will be the one to commission them. The good thing again is that Biofactories produce clean seeds; that is, they are free of diseases or pests. They are also pure seeds, in terms of their genetic makeup.

We have a second one now. We established it in collaboration with the University of Ilorin; we should commission it before the end of the year. We need more than ten of it but we are not planning to do more than those two. We are rather asking the private sector to come in but they will only come in when they know the market is there. We are in fact exploring a PPP arrangement to manage even the ones we have now because we want them to run on commercial basis. We are already talking to the ICRC to see if we can get a core investor to take them over and run them.

We need more than ten like I said. Each of the one we established will produce just about a million seedlings every year. Each of our facilities can only produce seedlings that can only plant 70 hectares. The promoter only needs to get the first set of seeds from there, after that he will multiply and can continue to produce his own seeds in his own nursery.

There has been a lot campaign against the consumption of sugar in recent years. How has that affected the sugar industry?

Yes, there is a lot of de-marketing for sugar now! We think it is a conspiracy against our sector but they shall not succeed. (laughs). We keep saying however that sugar doesn’t cause diabetes; you can ask the medical people about this. It’s a failure of metabolic processes that can cause it, if you now take sugar in excess, it will aggravate the problem. If you have Insulin that works, it will metabolize the sugar. Do you know that if you do not have sugar in your system for a minute you may die, it’s the basic unit of energy that powers our metabolism? If your brain lacks sugar for a second, you are brain dead. But of course everything you take in excess is bad, even ordinary water, if you take too much of it, you run into problems. But you must know one thing, in Nigeria and in most parts of the world, over 82 percent of the sugar consumed goes to the industries, the remaining 18 percent are actually what you and I use in our tea; so even if people stop adding sugar to their tea, the sugar industry will still survive because the confectionery, pharmaceutical, soft drinks, dairies and other similar industries need sugar as an important component of their production process.  So what we in the industry preach is moderation in the consumption of sugar, just like in the consumption of everything else.