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‘Why CBN limited sugar importation to Dangote, BUA, Flour Mills’ - THE NATION
Mr Zacchaeus Adedeji is the Executive Secretary, National Sugar Development Council (NSDC). A First Class Accounting graduate of the Obafemi Awolowo University, Ile-Ife and Harvard Kennedy School of Government, Adedeji was the Corporate Finance Manager (Accounting, Treasury and Internal Control) for West Africa at Procter & Gamble. The former Commissioner for Finance, Oyo State, in an interview with reporters including Southwest Bureau Chief BISI OLADELE, sheds more light on the controversial decision by the Central Bank of Nigeria (CBN) to limit sugar importation to only Dangote Sugar, BUA and Golden Sugar Ltd. He also hints of the future of sugar production in Nigeria and how the agency regulates an industry dominated by big private corporations.
Recently the Central Bank of Nigeria (CBN) announced that sugar importation should be restricted to Dangote, BUA and Golden Sugar. Many people feel this is empowering a few big players who can fix prices, which is bad for the common man. What is your take?
First, let me clarify that what the CBN has done is very much in tune with our Master Plan. At the beginning of the implementation of the Master Plan, there are conditions set for those wishing to participate in the BIP (Backward Integration Programme). One of the conditions is for them to have a verified plan to produce sugar locally. The three companies you mentioned are those who have committed huge investments into the plan by setting up refineries with a minimum refining capacity of 100,000 metric tons for each of them and they have also keyed into the BIP.
Sugar importation is based on quota which is issued under the terms of our Master Plan to any company that can produce a minimum of 100,000 metric tons of sugar locally. What CBN has done is to link our Master Plan progress to entitlement to forex at official rate. These three companies you mentioned have, in compliance with the Master Plan, been allowed some incentives and concessions to encourage their investments in local sugar production. As a regulatory agency, NSDC is charged with measuring and reporting on this progress to ensure that they continue to meet the conditions for those incentives. We have reinvigorated that monitoring process to ensure that incentives are only granted to those that meet the conditions in terms of their attainment of the Master Plan objectives, especially with regard to backward integration. Progress must be measurable and we have communicated this clearly to all.
At NSDC, we actually want as many operators as possible to key into the scheme, because this will enhance local production and create thousands of jobs. Our target is to have more of such operators. We are actively working with a number of smaller players to help them get to the 100,000 MT target as quickly as possible. From my background in Procter and Gamble, where we produce products with lots of competitors I know that competition spurs excellence and innovation. Ultimately, this is very good for the consumer by lowering prices and increasing choice. It is also good for the companies themselves. So, I expect CBN to widen this list, as more operators key into the scheme. Don’t forget that local production is our primary focus. So, importation should be a temporary state of affairs to supplement until local production can meet our needs. The quantity imported should reduce over time.
The National Sugar Development Council (NSDC) has not been a prominent government agency and some will say there is not much achievement in the last few years. How do you hope to correct this?
It will be very unfair to say the agency has not achieved much before my advent. One of the greatest assets we have at the NSDC today is the Master Plan put in place by the agency. The Agency has succeeded in stopping the importation of refined sugar. The country was spending heavily on the importation of refined sugar hitherto to meet its consumption which has now grown to 1.7 million metric tons. Through the instrumentality of the plan put in place by the agency, Nigeria now has a combined local production capacity that is about twice that.
The NSDC, thereafter, selected those who can achieve backward integration programme (BIP) to add value to the raw sugar being brought in. This has led to the creation of hundreds of thousands of jobs for Nigerians working in the three local refineries. So, NSDC has done very well in increasing the country’s sugar refining capacity. That is the starting point. Today, the country does not import refined sugar. We only import raw sugar which is refined in the refineries set up by the operators in the country. The focus now is our backward integration programme which we are now running. So, the same energy we displayed in putting a Master Plan in place is being devoted to the backward integration programme.
But I think every stakeholder agrees that we could do much better in terms of our attainments and this is what we are aggressively trying to address. The Master Plan itself has very noble objectives which, taken together, could make sugar a very important job and wealth creator for Nigeria. It would reduce importation and the demand for foreign exchange and could even earn us dollars from export. So, those that conceived the plan really had best intentions. However, the key to a plan is in its implementation.
Since I assumed office, I have been trying to understand and address the constraints to progress. These constraints include availability of suitable land, hostility among some host communities, financing and infrastructure. For example, sugar grows under quite specific conditions and requires considerable amount of water. So, just having land is not enough. The land must have the correct topography and also have adequate water via irrigation. Then there must be provision of infrastructure to enable mechanised farming to be conducted. So, as you can imagine, to really develop the industry as we desire, many stakeholders across the three tiers of government and the private sector have roles to play.
