Abuja - Nigeria’s biggest sugar refiner will spend $1.5 billion (R15.4bn) over the next five years on farming cane at home, responding to a government drive to make the country less reliant on its oil industry.
Dangote Sugar Refinery, which is majority owned by Africa’s richest man, Aliko Dangote, had shied away from the risks associated with growing cane and preferred to focus on refining imported raw sugar.
But hikes in government duties, along with incentives for agricultural development, have persuaded it to think again.
“In the next five years, we should be able to produce 1.5 million tons locally, from around 50 000 tons now,” Abdullahi Sule, the managing director of Dangote Sugar, said on Tuesday on the sidelines of a conference in the capital, Abuja.
He said the firm, which claims 70 percent of the domestic sugar market, would invest $1.5bn in the process.
Sule also said Dangote Sugar would expand its refining capacity to 2.5 million tons a year by the end of 2014 from 1.4 million tons now at a cost of about $100 million.
President Goodluck Jonathan is trying to revive farming to reduce Nigeria’s reliance on the oil industry and to cut its food import bill of $11bn a year.
Agriculture makes up 45 percent of the economy, compared with oil’s 15 percent. But the sector is in disarray and is largely the preserve of peasant farmers. To encourage its development, the government has scrapped duties on imported machinery for sugar processing plants.
Firms that invest from “sugar cane to sugar”, rather than focus on refining, have been given a five-year tax break. Raw sugar import taxes have risen to 60 percent, from 5 percent last year, and will keep rising to about 90 percent.
Nigeria has also banned imports of packed refined sugar.
Flour Mills of Nigeria also planned a major expansion into sugar production, vice-chairman John Coumantaros told the conference. – Reuters