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, Otunba Niyi Adebayo. The contents of these letters depicted an 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 on the same side of the argument with Dangote Group, against the latter’s protracted rival, BUA Group.

Messrs Aliko Dangote of Dangote Industries Limited and John Coumantaros of Flour Mills of Nigeria, Plc, petitioned the 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 done through expansion of its Sugar Refinery in Port Harcourt, Rivers State, against its quota of imported raw sugar, without commensurate investment in the Backward Integration Program (BIP), as covered by the provisions of the Nigerian Sugar Master Plan (NSMP).

Backward Integration Program (BIP) is a provision of the NSMP. In 2013, the Nigerian Government came up with an initiative called the Nigerian Sugar Master Plan (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. It is meant to enhance a hundred 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 give quotas for the importation of raw sugar for refining in accordance with verifiable proofs of investment in local production based on the NSMP roadmap. 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 NSMP to ensure the following: self-sufficiency in the 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 Refinery of breaching provisions of NSMP via a strongwilled letter signed by the duo and was addressed to Honorable Minister of Trade and Investment, Otunba Niyi Adebayo.

Instead of the Minister to investigate the allegations raised by the petitioners, he wrote a letter requesting BUA Group to respond to the allegations, instead. BUA Group via its Chairman, Alhaji AbdulSamad Rabiu, replied the letter with counter accusations against the duo of Dangote Group and Flour Mills of Nigeria. He further stated that the duo want to frustrate BUA’s Sugar Refinery in Port Harcourt, just to continue with the unhealthy duopoly, price fixing and the creation of artificial scarcity to milk Nigerians.

I think the whole crisis smack of gross failure of regulatory authority. The Minister in the middle of this saga, Otunba Niyi Adebayo and National Sugar Development Council (NSDC) — the authorities mandated to regulate the sector, have woefully defaulted on their primary responsibilities to provide supervisory leadership in the sector.

Two major players in the sugar industry, Messrs Aliko Dangote and John Coumantaros wrote a joint petition against another big dealer in the sector, BUA Sugar Refining, instead of the Minister of Trade and Investment to investigate the authenticity of the allegations via the National Sugar Development Council (NSDC), he incompetently wrote a letter to the accused asking him to “respond”. What exactly did the Minister expect BUA Sugar Refinery to have said: guilty as charged? It is laughable.

Instead of the Minister and officials of NSDC to visit BUA Sugar Refinery in Rivers State, to ascertain the level of breach as alleged in the petition, he sat in his office without action. Hon. Otunba Niyi Adebayo literally outsourced his job of regulation to BUA Sugar Refinery, when he asked the Company to write a rejoinder, without doing his due diligence as a regulator. This is the catalyst that exacerbated the crisis.

Supposed confidential letters of official correspondences got leaked to the media. What the Minister of Trade and Investment, Otunba Niyi Adebayo would have resolved by exercising his constitutional regulatory mandate got shifted to court of public opinion. Why the copies of the letters began flying in the social media, the Minister and his office kept mute. Foot-dragging on such an important national issue is tantamount to economic sabotage and official laxity.

Where is the much-promoted easy-of-doing business when simple trade disputes like these will be handed over to social media commentators to judge? Imagine one of the telecom operators like GLO petitioning the Minister of Communications, against MTN’s suspected violation of the rule of the game. And instead of the Minister via Nigerian Communications Commission (NCC) to investigate the allegations, he asks MTN to “respond”. This is regulatory failure on the part of Hon. Otunba Niyi Adebayo.

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 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?

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 Federal Government to make Nigeria be self-sufficient in sugar production, by sabotaging local production aspiration.

It beats my imagination that a Company that is more interested in importation of raw sugar for refining; a business approach that weakens our local production capacity, puts pressure on the nation’s strained foreign exchange, and deny 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 is promoting endless importation by paying lip service to investment in local production capacity or Dangote Group that discourages indefinite importation by enriching local production capacity? And it was even Dangote and Flour Mills that drew the attention of a sleeping regulator, yet the supposed referee is still cluelessly undecided while the crisis linger.