With the current state of currency fluctuations and a Nigerian sugar industry that is still largely dependent on imported raw sugar, indications are that sugar refiners within Nigeria are set to discontinue credit facilities to their customers. This is expected to guard against any currency and transaction risks as well as prevent hedging.
In the statement issued by the management of Nigeria’s second largest sugar refiner, BUA Sugar Refinery (BSR), to its customers, the management of BSR said that whilst the official exchange rate had remained stable, significant currency and transaction risks still exists for customers who collect sugar on credit. As a result, the company is temporarily discontinuing its credit lines to those customers effective Monday, January 18, 2016 till further notice. This measure, according to the statement, will however not affect the company’s operations and sugar deliveries will continue to be made against verified payments.
In a related development, BSR has also reiterated its support for the Backward integration policy (BIP) of the Federal Government’s National Sugar Master Plan. The company said that extensive work is ongoing at its Lafiagi, Kwara state BIP site with over 20,000 hectares and it has another 50,000 hectares of farmland in Bassa, Kogi. These two operations form the fulcrum of BUA’s backward integration programme for Sugar and this will further reduce the country’s dependence on imported raw sugar while supporting the value chain in sugar production within Nigeria.”
At a roundtable in Abuja recently, the Executive Secretary of the Nigerian Sugar Development Council, Dr Latif Busari said there was hope for the sugar industry in Nigeria whilst identifying the fluctuation in prices of critical inputs in sugar cane production, owing to vagaries created artificially most times by the middlemen and profiteers in the distribution of such inputs as fertilisers, agro chemicals, water pumps and water delivery hoses, which most times goes beyond the capacity of the farmers as a major challenge. “Let me say now that our drive in the master plan is to first achieve 100 per cent self-sufficiency. When we do that we can then think about export. It is very important that we stop the huge drain on foreign exchange and in the process create large number of jobs for Nigeria through the implementation of the Sugar Master Plan. That is our priority now,” he said.
It is currently estimated that Nigeria will need about 3.1bilion US dollars to achieve self-sufficiency in sugar production.