The Struggle for Soul of Sugar Market in Nigeria and Matters Arising
By Solomon Ejim
Recently, the social media was saturated with letters that emanated from big sugar refiners in the country, addressed to the Honorable Minister of Trade and Investment, Niyi Adebayo. The contents of these letters depicted ongoing war of attrition over the control of the nation’s sugar market between these big players, namely, Dangote Group and BUA Group. Flour Mills of Nigeria, the third in the squabbles, is in cohort with the position of Dangote Group, which frowned at some of the practices of their main rival, BUA Group.
Messrs Aliko Dangote of Dangote Industries Limited and John Coumantaros of Flour Mills of Nigeria, Plc, petitioned Federal Government through the Ministry of Trade and Investment over alleged sabotage of the Nigerian Sugar Master Plan by BUA Sugar Refinery.
This violation is allegedly done through the expansion of BUA Sugar Refinery in Port Harcourt, Rivers State, against the spirit and the letters of Free Trade Zone, where it operating.
According to the memo to the minister of trade and industry by Dangote Sugar and Flour Mills of Nigeria, BUA operation of its Sugar Refinery within the Free Trade Zone violates its quota of imported raw sugar, without commensurate investment in the Backward Integration Programme (BIP), as covered by the provisions of the Nigerian Sugar Master Plan (NSMP).
Backward Integration Programme (BIP) is a provision of the NSMP. In 2013, the Nigerian Government came up with an initiative called the NSMP. The essence of the Plan is to provide a comprehensive roadmap that would galvanize both government and stakeholders in the sugar industry towards assisting the country to achieve self-sufficiency in sugar production.
The policy is meant to enhance a 100 percent local production of sugar in the country—both in raw materials like sugarcane and its byproducts.
While this local capacity for sugar production is being developed, the government will continue to allow refiners a specific quota for the importation of raw sugar for refining in accordance with verifiable proofs of investment in local production based on the NSMP.
But it seems some stakeholders prefer continuous and endless importation of raw sugar for refining, instead of devoting the required energy and investment to making Nigeria self-sufficient in sugar production in the next few years. It is akin to loving quick gain to long-term investment at the detriment of the economy.
In the hierarchy of prioritized commodities, Federal Government considers sugar as the third most important commodity, after rice and wheat. This premium on sugar was what prompted the drafting and approval of Nigerian NSMP to ensure the following: self-sufficiency in local production of sugar, ethanol, animal feeds, increased capacity in electricity generation, employment, etcetera.
Unfortunately, some industry players are always looking for ways to cut corners and sabotage this Plan for selfish gain, and against national aspiration. Messrs Aliko Dangote and John Coumantaros accused BUA Sugar Refining of breaching the provisions of NSMP.
BUA Group via its Chairman, AbdulSamad Rabiu, responded to the petition with counter-accusations, alleging that Dangote and Flour Mills of Nigeria are also guilty of the same offence. He further stated that the duo want to frustrate BUA’s Sugar Refinery in Port Harcourt, just to continue with unhealthy duopoly, price-fixing and the creation of artificial scarcity to milk Nigerians.
Nigerians are waiting for Federal Government to resolve this dispute between these business conglomerates.
However, assuming, but without conceding that BUA’s counter-allegations against the duo of Dangote and Flour Mills, are true, does that validate his own breach of the Nigerian Sugar Master Plan? Can two wrongs make a right? Did BUA write a petition against Dangote and Flour Mills when he discovered that they were fixing prices and creating artificial scarcity?
Why did he wait for him to be reported to the authorities, before coming up with the watery defence that “you’re guilty also”. Why is BUA always whipping unnecessary sentiments whenever he is accused of breaching the rules of the game?
Can he show Nigerians the letter he wrote to Federal Government to complain when he realized that Dangote and Flour Mills created artificial scarcity and fixed price of the commodity against the rule?
Why always inciting Nigerians against its competitions whenever it seems attention is called to his company’s breach of the rule? He who comes to equity should do so with clean hands. This looks more like the hypocrisy of the highest order on the part of BUA.
BUA alluded that the company is fighting duopoly of Dangote and Flour Mills of Nigeria in the sugar market, when it is actually frustrating efforts and vision of the Federal Government to make Nigeria self-sufficient in sugar production, by sabotaging local production aspiration.
It beats my imagination that a company that is allegedly more interested in importation of raw sugar for refining, a business approach that could weaken local production capacity, puts pressure on the nation’s already strained foreign exchange reserves, and denies Nigerians opportunities for new jobs, is creating a flawed impression that it is fighting for the masses against price-fixing and arbitrary increment.
Between Dangote, Flour Mills and BUA, who is actually fighting for Nigerians: BUA Group that was accused of promoting endless importation by paying lip service to investment in local production capacity or Dangote Sugar and Flour Mills of Nigeria that are trying to discourage indefinite importation by enriching local production capacity?
Importation is not bad in its entirety, but the NSMP has provided that much-needed exit door out of this rat race of capital flight of scarce foreign exchange.
No national economy grows when investment in local production is sidestepped and discouraged in favour of importation.
Very soon, Dangote Oil Refinery will come on stream. Those who got licensed to build refineries before him and have been busy making quick gains via importations of refined petroleum products will still accuse him of “monopoly”.
This is typical of businesses that want to reap without sowing. They want Return on Investment (RoI) without investing commensurately.