Sugar: Nigeria risks losing African market over high production costs

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By Babajide Komolafe

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Nigeria risks conceding the African market to other countries unless it urgently tackles high power, credit and logistics costs undermining the competitiveness of local manufacturers.

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Executive Secretary, National Sugar Development Council, NSDC, Mr Kamar Bakrin, stated this at the technical session of the 17th National Council on Industry, Trade and Investment, NCITI, in Enugu.

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Warning about the competitive pressure from the African Continental Free Trade Area, AfCFTA, Bakrin said: “Either our goods are crossing borders going out, or everyone else’s goods are crossing ours coming in.

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“We are either going to compete, or we are going to concede the market. There is no third option.”

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Highlighting Nigeria’s cost disadvantage, he said: “Industrial electricity costs about eight US cents per kilowatt-hour in Vietnam, 10 cents in China, 15 cents from the grid in Nigeria and about 30 cents when manufacturers depend on diesel generators.

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“Last year, Nigerian manufacturers spent an estimated N1.34 trillion generating their own electricity. Every factory in Nigeria is running a second, unwanted business as a private power station.”

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On the cost of finance, Bakrin said: “Working capital costs between 27 and 35 per cent in Nigeria. In Vietnam, it is about nine per cent. In China, it is about three per cent.

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“Manufacturing contributes barely eight per cent to our GDP, while capacity utilisation stands at 57.7 per cent.”

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He consequently proposed measures to reverse the trend. “Every state should designate at least one industrial cluster for dedicated power within 12 months.

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“We need a federal-state compact to harmonise levies and eliminate informal checkpoints on industrial corridors.

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“We should introduce an annual State Industrial Competitiveness Index that publicly ranks states on power, land, levies and logistics, while the Nigeria First procurement policy must be enforced at federal and state levels.”

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Bakrin added: “We need industrial power at eight to 10 cents per kilowatt-hour, single-digit lending rates and port clearance below seven days, instead of the current 18 to 21 days.”

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Citing the expansion of Nigeria’s urea production capacity from 500,000 tonnes in 2005 to 6.5 million tonnes presently, he said: “When a country prices inputs as if it wants industry to live, industry lives.”

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