The Government of Nigeria has banned imports of packaged sugar, granulated and in cubes, beginning January 2013.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
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Nigeria Intensifies Protection to Grow its Sugar Sector
Russ Nicely, Regional Agricultural Counselor
Peace Olaito & Uche Nzeka
The Government of Nigeria has banned imports of packaged sugar, granulated and in cubes, beginning
January 2013. Nigeria’s Trade and Investment Minister, Dr. Olusegun Aganga, said this was in line
with the Nigerian Sugar Master Plan which aims at achieving self-sufficiency in the country’s sugar
production by 2020. Imports of machinery for local sugar refineries have recently been made tariff-free
and investors in domestic sugar processing also get a five-year tax holiday. Minister Aganga indicated
that the National Sugar Master Plan was designed to increase local sugar production, attain self-
sufficiency, reduce dependence on importation as well as create job opportunities and increase
prospects of contributing to the production of ethanol. Currently, more than 90 percent of all sugar
consumed in Nigeria is imported raw, mostly from Brazil, and refined by domestic sugar refineries.
Nigeria’s Trade and Investment Minister Dr. Olusegun Aganga, together with the Executive Secretary
of the country’s National Sugar Development Council (NSDC), Dr. Latif D. Busari, announced recently
that the GON had banned imports of packaged sugar, granulated and in cubes, effective January 2013.
According to these officials, this is being done as part of the Nigerian Sugar Master Plan, which aims to
achieve self-sufficiency in sugar consumption by 2020. Also, Nigeria’s Minister for State, Agricultural
and Rural Development, Dr. Bukar Tijani, (Deputy Minister for Agriculture) on a different occasion,
also announced that the GON will ban all imports of sugar in any form, raw or refined, into the country
by January 2015.
Pending the outright sugar ban in 2015, Minister Aganga indicated that presently all importers of brown
sugar are mandated to own sugar farms in the country or contract out sugar farming to individual local
farmers if they are to continue having licenses to import brown sugar for refining. He disclosed that the
GON would take the issue of sugar policy implementation seriously in order to develop the country
economically and create wealth for Nigerians.
According to the GON officials, the import ban on sugar would attract an estimated $3.1 billion foreign
direct investment into the country, whereas the backward integration program for sugar would generate
local production of 1.8 million tons of sugar and 161.2 million liters of ethanol annually. The new
measures are also expected to create about 37,000 permanent jobs and approximately 80,000 seasonal
jobs, save about U.S. $66 million in foreign exchange on fuel imports annually and $350 to $500
million in foreign exchange on sugar imports annually.
Domestic Sugar Production
Nigeria’s domestic sugar production in MY2011/12 is forecast at 65,000 tons (raw value), up from the
revised estimate of 60,000 tons in MY2010/11. The Nigerian Sugar Development Council (NSDC) was
established as the GON agency responsible for formulating sugar policies and strategies. NSDC
recently refocused towards promoting private sector-led development. Government-owned sugar
estates were privatized in 2005. Investment in local sugar production is hampered by the huge funds
required to establish a sugar estate as well as the lack of long-term loans for investment purposes in the
country. However, the management of these estates improved under privatization, which also mostly
accounted for the marginal increase recorded in sugar production. For further details, see
Nigeria’s Sugar Consumption
Nigeria is the largest consumer of sugar in Africa apart from South Africa, and the industry is still
dependent on raw sugar imports. Nigeria’s overall sugar consumption in MY2011/12 was estimated at
1.34 million tons and raw sugar imports 1.5 million tons. However, only 100,000 tons of refined sugar
was imported that year. Industry sources project Nigeria’s sugar consumption will grow 27 percent to
reach 1.7 million tons by 2016. This growth projection is driven mostly by the expectation of strong
population growth and the lack of available substitutes as well as increasing industrial demand.
Sugar use in industrial activities such as manufacturing soft drinks, pharmaceuticals, biscuits, other
beverages and confectionery products is also rising steadily despite higher international prices, and there
is no competing High-Fructose Corn Syrup (HFCS) in the market. Demand for direct household
consumption also remains strong. More that 90 percent of Nigeria’s sugar needs are met by import of
raw sugar, shipped mostly from Brazil, which is then refined by the local domestic sugar industry. The
bulk of the available refined sugar supply is also exported from Brazil.
New Sugar Policy Measures
President Goodluck Jonathan on October 10, 2012 announced a new tariff for raw and refined sugar as
well as sugar related equipment and machinery in his 2013 Budget Speech presented to the country’s
National Assembly (the country’s national legislative arm). He proposed a zero per cent import duty on
machinery and spare parts imported for local sugar manufacturing industries, from sugarcane to sugar
value chain investors. There will also be a five year tax holiday for investors in the sugar value chain, a
10 percent import duty, and a 50 percent levy on imported raw sugar, while refined sugar will attract a
20 percent duty and a 60 percent levy. These measures became effective January 1, 2013 except for the
sudden imposition of the outright import ban on refined sugar announced in mid January 2013.
Currently two major companies refine sugar in the Nigeria. Dangote Sugar remains the dominant player
with a refinery capacity of 1.44 million tons, followed by BUA Sugar Refinery with a capacity of
720,000 tons per year. The combined capacity of the two refineries is 2.3 million tons of sugar per year,
far exceeding national consumption. More investors plan to establish sugar refineries despite this
existing overcapacity. Nigeria’s low five percent import tariff on raw sugar has made local sugar
refining very attractive.
The sugar tariff regime seeks to boost the development of sugar cane production to meet the raw sugar
needs of the existing and the upcoming domestic sugar refining companies. However, Dangote Sugar
Refining Company is the only one that has developed a sugar estate which it acquired through the GON
privatization program and has advanced ahead of all others in its raw sugar production capacity. Post
believes that under the new tariff regime, Dangote Sugar will be the company with the largest
While the tariff increases and import ban are expected to provide incentives for investment in local
sugar production that might help reduce costs of sugar manufacturing, the impact this development may
have on local food production, especially confectioneries and bakeries, is unknown. If local production
of raw sugar (sugar from sugar cane) is not enough and prices increase, this will lead to increased prices
for many other items that depend on sugar as a major ingredient. However, local manufacturers
utilizing sugar as an input are expected to seek available and inexpensive sugar substitutes. This may
create market opportunities for exporters of Sweeteners and High-Fructose Corn Syrup (HFCS).
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