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Dangote begins backward integration in sugar, steps up local sourcing of sugarcane, others

Leading billionaire industrialist and President of Dangote group has made up his mind to apply the feat of backward integration in the growth and development of the Nigerian sugar industry.

It would be recalled that during the administration of former President Goodluck Jonathan, the policy of backward integration was adopted in the production of cement and it paid off as today, Nigeria has moved from the era of cement importation to exportation.

Dangote Sugar Refinery Plc has concluded plans to intensify its refined sugar from locally grown sugarcane. The move will aid self-sufficiency in sugar production and eliminate reliance on foreign exchange, as well as the current volatility of raw sugar import prices.

The 2016 financial year saw global sugar prices increase to the highest level operators ever witnessed in the past four years. Indeed, the elevated prices were due to reduced planting in Brazil, global warming resulting in drier than normal weather conditions in Brazil and India, the two largest sugarcane producing countries.

However, lead in the cause of the crisis was the strengthening of the Brazilian Real against the U.S. dollar, which resulted in Brazilian farmers holding their sugar stocks rather than selling, causing a temporary supply shortage.

In a release on its 2017 financial year, Dangote sugar refining firm noted that it has already begun to pick up market share from competitors and smugglers, even as it increased its fleet to meet customers’ orders timely.

Activities in the just ended 2016 financial year showed that the firm’s seasonal sugar production at savannah peaked at 17,122  tonnes as against 6,610 tonnes in 2015, while its full year refinery production at Apapa stood at 791,800 tonnes from 740,350 tonnes recorded in the previous year.

Whereas its sugar sales volume was 778,518 tonnes last year compared to 782,000 tonnes in 2015, additional fiscal figures showed that the Group’s revenue was up by 68 per cent at N 169.72 billion from N101.06 bn, while a profit after tax of N14.4 billion was recorded as against N11.14bn in 2015.

Explaining more on the 2017 outlook, Acting Group Managing Director, Abdullahi Sule, noted that “We are very pleased with the results for the period under review, our revenue grew by 68 per cent and improve sales volume compared to 2015 despite the current macro-economic challenges”.

“Our focus in the current year and for the future remains leveraging our strengths to maximize every opportunity to generate sales, increase our market share and create sustainable value for our stakeholders.

“Concerted efforts are being made towards the actualization of our BIPs plan. The implementation strategy has changed and the full focus is now on the expansion of the Savannah Sugar Estate to its full potentials, and development of the new site at Tunga in Nasarawa State.

“We are hopeful that the naira will continue to strengthen against the US dollar to help eliminate the current challenges we are faced with in sourcing foreign exchange to fund our raw material import and equipment requirement for the backward integration projects,” Sule said.