Sugar refiners to scrap credit facilities to customers

Given the current state of currency fluctuations and a Nigerian sugar industry that is still largely dependent on imported raw sugar, some sugar refiners in 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 sugar refiner, BUA Sugar Refinery (BSR), to its customers, the management of BSR said that while the official exchange rate has 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 19, 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 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 central point 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, Latif Busari,  executive secretary of the Nigerian Sugar Development Council,  said there is hope for the sugar industry in Nigeria while identifying the fluctuation in prices of critical inputs in sugar cane production, owing to vagaries created artificially mostly by the middlemen and profiteers in the distribution of such inputs as fertilisers, agro chemicals, water pumps and water delivery hoses, which often go 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,” Busari said.

Players in the sugarcane to sugar value chain have already pumped over $2.6 billion in investments. It is currently estimated that Nigeria will need about $3.1bilion to achieve self-sufficiency in sugar production.

Odinaka Anudu