AfCFTA: Secretariat Commends FG for Establishing Trade Resolution Authorities

Dike Onwuamaeze highlights the benefits of the country’s backward integration policy

The Secretary General of the African Continental Free Trade Area (AfCFTA) Secretariat, Mr. Wamkele Mene, has commended efforts of Nigeria’s government to establish trade remedy authorities that would investigate and address issues of origin and prevent dumping under the implementation of the AfCFTA agreement.

He said this during a courtesy visit to the Lagos Chamber of Commerce and Industry (LCCI) recently.

Mene, observed that Nigeria was at advanced stage of establishing the agencies, which would enable it to join Egypt and South Africa as the only countries that have such arrangement in the continent.

He said: “At the moment only Egypt and South Africa have their trade remedy authorities ready, and this has the ability to prevent dumping and address many other challenges associated with inter-African trade.

“Nigeria is at the advance stage of establishing a trade recovery remedy authority and this is a very positive step.”

He assured members of the LCCI that the AfCFTA’s secretariat would address the challenges arising from the rules of origin under the agreement in order to protect economies of participating nations from dumping of products, amongst others and called for capacity building for the custom authorities across the continent for effective implementation of the trade rules of the AfCFTA.

Mene, also said the AfCFTA would accelerate the continent’s recovery from the negative impacts of the COVID-19 pandemic disease and strengthens the continent’s industralisation growth and development agenda as well as its participation in international trade.

He added: “By 2035, the objectives of the AfCFTA, will put Africa on the path to industrial development and we are building capacity to diversify our exports within and outside the continent.”

The secretary general also said the AfCFTA would contribute to the realisation of the prediction of the International Monetary Fund that the continent would grow by 2.1 per cent in 2022 with a successful roll out of the vaccines. He observed that Africa has been growing at the rate of 3.4 per cent annually and was the home of six out of 10 fastest growing economies of the world before the onset of the pandemic.

However, “with COVID-19, we went from that to a contraction of a magnitude that we have not had in about 30 years,” he said.

In her remarks, the President of the LCCI, Mrs. Toki Mabogunje, said the AfCFTA was largely a story of immense excitement and expectation among the Nigerian business community because of its inherent opportunities.

Mabogunje said the AfCFTA would make the continent more integrated, united and prosperous, especially in the light of the numerous benefits of a larger market. “The chamber believes it’s an opportunity for countries to scale up their competitiveness by improving their investment climate. Ultimately, it would be to the benefit of the economies of the continent and the welfare of our citizens,” she said.

The recent commissioning of the Nigeria Sugar Institute (NSI) in Ilorin, Kwara State, provided stakeholders in the Nigerian Sugar Master Plan (NSMP) opportunity to review the implementation of one of the country’s backward integration policy.

The institute was jointly established by the federal government and key private sector operators in the sugar industry to address the challenges of skilled manpower and expertise needed to fully realise the objectives of the NSMP.

Speaking during the inauguration of the institute, the Minister of Industry, Trade and Investment, Mr. Niyi Adebayo, stated that investments already made by the federal government and the private sector in the sugar industry are capable of creating thousands of jobs in agriculture and manufacturing sectors.

Adebayo said: “The government, therefore, recognises the need to deepen the partnership with the private sector to drive access to skills development, research and development in a manner that promotes competition, productivity, profitability and sustainability in the sugar industry.”

He commended the stakeholders for their support, pledging that the expectations of a virile and competitive sugar industry for the country through the NSMP would be realised.

From the Beginning

The journey to the development of the NSMP commenced in 2008 under the administration of the late President Umaru Musa Yar’Adua. It was approved and adopted in 2012 by the administration of former President Goodluck Jonathan. But its implementation took off in July 2013 with an estimated target of producing 1.79 million tonnes of sugar locally by 2020 amongst other objectives.

The then Minister of Industry, Trade and Investment, Olusegun Aganga, who performed the signing-off ceremony that heralded its commencement in Abuja, had stated during ceremony that the NSMP would mark the beginning of the nation’s journey towards industrialisation, in line with the Nigerian Industrial Revolution Plan (NIRP).

He had expressed delight that operators in the private sector have shown commitment to the implementation of the new sugar policy as some of them are currently discussing with the governments of Adamawa, Kogi, Kebbi, Sokoto and Taraba States.

Similarly, Dr. Okechukwu Enelamah, who succeeded Aganga at the Ministry of Industry, Trade and Investment, had 2017, said the backward integration policy of the federal government needed to be consolidated in order to replicate the results seen in the cement industry.

Enelamah said: ‘Sugar has been challenging and we must overcome those challenges. This is part of the reasons why President Muhammadu Buhari inaugurated the industrial council that would bring together leaders and players in both private and public sectors in order to boost industrialisation.

“We are resolute to partner with private sector to address these challenges. We are not only interested in discussing solutions but we are bent on implementation.”

The Sugar Policy

The NSMP was crafted by National Sugar Development Council (NSDC) for the development a roadmap for the country’s sugar sub-sector in 2008 in response to the 3rd Presidential directive.

The road map was designed to make the Nigerian sugar industry transform into a world class multi-product sugarcane industry that would meet the national sugar demand through local production.

The National Council on Commerce and Industry (NCCI) held a meeting in May 2010 in Kano and deliberated and accepted the measures proposed in the NSMP and recommended same for the consideration and approval of the Federal Executive Council (FEC).

The FEC considered the memorandum titled “Roadmap to Local Manufacturing of Sugar: The Nigerian Sugar Master Plan and a Regime of Fiscal Incentives” on October 22, 2010, and referred it to the Economic Management Implementation Team (EMIT) for evaluation and inputs from relevant MDAs before re-presentation to council.

Following series of EMIT meetings and individual consultations with relevant key agencies of government, the NSMP and its memorandum were amended to reflect the comments initially made by the members of the FEC in October 2010 and to incorporate the inputs of relevant MDAs such as Finance, Agriculture, National Planning Commission, Water Resources, Health and the Office of Chief Economic Adviser.

Finally, on Wednesday, 19 September, 2012, the FEC approved the NSMP as well as a number of policy measures and a regime of fiscal and investment incentives designed primarily to provide conducive environment for its implementation.

The justification for the NSMP, according to the NSDC stemmed from the revelation by the Nigeria Customs Service (NCS) that the country then was spending a yearly average of approximately N30 billion, on the importation of sugar.

For instance, Nigeria expended N53.6 billion and N73.0 billion and N101.9 billion on sugar importation in 2009 and 2010 and 2011, respectively. These were years when the average exchange of the Naira to the dollar might be N120.

Dangote’s Experience

The Dangote Group, through its Dangote Sugar Refinery Plc, is playing deep in the backward integration policy with the vision of ending the importation of sugar into the country. It is targeting an annual production 1.5 million metric tonnes of sugar from its backward integration investments in Nasarawa, Adamawa, Kogi, Kwara, Taraba and Niger States.

The signing of $700 million MoU between the Dangote Group and the Nasarawa State Government lifted hope that Nigeria’s dream of becoming self-sufficient in sugar production would soon to be realised.

The MoU covered the deed of acquisition, lease and development agreement.

The President of the Dangote Group, Alhaji Aliko Dangote, explained that the group’s integrated sugar complex in Tunga in Awe Local Government Area of Nasarawa State would consist of 60,000 hectares of sugar plantation in its Phase One and two sugar factories with capacity to produce 430,000 tonnes annually of refined white sugar.

This represents about 30 per cent of the country’s consumption and would be the largest plant in Nigeria. It would also provide 30,000 jobs for teaming youths in the state.

Aliko Dangote said the project would be expanded to 100,000 hectares at the Phase II of the project to make the sugar plant the largest in Africa.

He added that the project would align the Dangote Group with the government’s policy of diversifying the economy by a renewed focus on the non-oil sectors like manufacturing, agriculture and solid minerals.

He said: “Agriculture is a key sector in the industrialisation of any nation, therefore, the Dangote Group in support of the federal government transformation agenda in agriculture developed a sugar backward integration project plan targeted at the production of 1.5 metric tinnes per annum (MT/PA) from various sites across Nigeria, in 10 years.

“We are acquiring about 150,000 hectares for sugar plantation in Adamawa, Taraba, Nasarawa, Kwara, Kogi and Niger states.

“However, we intend only to concentrate on Adamawa, Taraba and Nasarawa States in the Phase I of the sugar project with a target to produce about 1.08 million tons of white sugar in the next five years,” adding that the group would establish integrated sugar mills, generate electricity, produce animal feeds amongst others.

Dangote Sugar stated that its goal is to attain annual production of 1.5 million MT/PA of refined sugar from locally grown sugarcane to serve both the Nigerian local and export markets. THISDAY was told that Dangote Sugar meets more than 50 per cent of its annual production requirement of raw sugar from its sugarcane farms.

Flour Mills’ Story

Another major player in the backward integration initiative in the sugar industry is the Flour Mill of Nigeria Plc (FMN). The FMN’s investments in sugar industry include the Sunti Golden Sugar Estates’s (SGSE) 17, 000 hectares of irrigable farmland and a sugar mill with capacity to process 4,500 metric tons (MT) of sugarcane per day.

The Chairman of the FMN, Mr. John G. Coumantaros, said the Sunti Golden Sugar Estates (SGSE) illustrated the FMN’s commitment to reduce sugar importation, save billions in foreign exchange, boost local capacity, and reduce unemployment by putting thousands of Nigerians to work.

FMN in 2019, merged the Golden Sugar Company with Sunti Golden Sugar Estates Limited in 2019.

The Sunti Sugar plant and farm, which is located at Mokwa, Niger State, was expected to create 10,000 direct and 50,000 indirect jobs.

Coumantaros said: “We will be spending about N34 billion over the next 10 years in support of the community and development of infrastructure in the area. This is very important. We have huge expenditure coming to the host community, creating jobs, education and building the economy in which people can make their livelihood.

“We will be having about 10,000 employees and another 50,000 indirect jobs around the area. We have employed about 5,000 people, we have got five community schools and working on fixing electricity in the area as there is no future without development.

“This is revolutionising and dramatically changing not only the Mokwa community but Niger State because this is one of the biggest investments in the state.”

The estate is expected to produce about 100,000 metric tonnes of sugar yearly.

FMN invested more than N1 billion in irrigation system with infrastructure including drain pumps, pump stations and a power grid to ensure the efficient cultivation of sugarcane.

The FMN added that the project would reduce sugar importation, save billions in foreign exchange, boost local capacity, and reduce unemployment by putting thousands of Nigerians to work.

Enclosed within a 35-kilometer dyke, the production facility area is 15,100 hectares, with a sugarcane area that features a maximum output of 10, 000 hectares. The dyke provides flood protection from the River Niger.

The N50 billion Golden Sugar Estate in Sunti, Niger State, was inaugurated by President Muhammadu Buhari in March 2018. It is a backward integration programme with 17, 000 hectares of land to refine sugar locally.

BUA Group’s Experience

The BUA Group is also attracted by the backward integration policy of the federal government in the sugar industry. The group currently has two ultra-modern and automated mega sugar refineries that utilise state-of-art equipment to refine high quality products for consumption and industrial uses.

It also claimed to be the only sugar refiner in the country that possess refining capabilities outside Lagos.

Like others, the BUA Group invested in large scale estates within the country to deepen its local sugar production through the acquisition of the Lafiagi Sugar Company Ltd (LASUCO) in Kwara State in 2008 and also, the establishment of the Bassa Sugar Company in Kogi State in response to Nigeria’s backward integration policy in the Sugar Industry,

The group has also acquired about 70,000 hectares of land for the purpose of setting up large-scale sugar plantations that would add significantly to the development of Nigeria’s local sugar industry.

Its sugar refineries are located in Lagos and Port Harcourt. They have total installed refining capacity of 1,440,000 MT/PA while its sugar plantations are the LASUCO Sugar Company, Lafiagi, in Kwara State and the Bassa Sugar Company in Kogi State.

The Chairman, BUA Group, Mr. Abdulsamad Rabiu, said that the firm is committed to the federal government’s backward integration agenda.

Rabiu said: “In addition, the BUA group has made huge investments in the sugar production and refining value chain within Nigeria. Verifiable effort has been made in developing a sugarcane nursery as well as deploying manpower, agricultural and construction equipment to our Lafiaji Sugar Plantation.

“We also run one of the largest and most efficient sugar refineries in Nigeria. To further boost local supply of sugar and support the government’s Backward Integration Policy for the industry, BUA Group also acquired an additional 50,000 hectares of land in Bassa LGA of Kogi state for the establishment of another sugarcane plantation.”

Benefits of the Policy

The Director General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, told THISDAY that the sugar master plan is an excellent initiative and consistent with the imperative of backward integration, especially at a time like this.

Yusuf pointed out that the sugar sector should normally be one of Nigeria’s areas of competitive strengths, assuring that an effective implementation of the plan would not only promote self-reliance in sugar, but would pave way for exports.

“It fits well into the expected benefits from the AfCFTA regime. Already, we have some sugar plantations including the Bacita and Savannah plantations. There are many locations, especially in the middle belt of Nigeria with suitable climate and soil for sugar plantations.

“But like in most investment policies, consistency is key. Monetary and fiscal policy supports are also needed for the realisation of the desired outcomes. Sugar is a major input for many industries. It is also consumed by majority of the citizens. We have the market to support the growth of the industry,” he said.

So far, the NSMP has attracted notable operators like the Dangote Group, The Flour Mill of Nigeria Plc (FMN) and the BUA Group who have made significant investments in the sugar industry, especially in the area of land acquisition to farm sugarcane and in setting up sugar refineries

Despite these benefits, operators have identified insecurity as one of the major obstacles to the full realisation of the backward integration policy in the sugar industry.

Other challenges which the government needs to tackle to sustain the progress recorded in the sector include huge capital cost, conflicts in land acquisition, insecurity, infrastructure deficit, water, environmental issues, lack of synergy among regulatory agencies and skill deficit.