Nigeria Seeks 7.1 Billion US Dollars to Achieve Sugar Self-Sufficiency

Nigeria needs 7.1 billion US dollars in investment over the next decade to achieve self-sufficiency in sugar production, with most of the funding expected to come from development finance institutions and long-term debt facilities, according to the National Sugar Development Council (NSDC).

Kamar Bakrin, the council’s executive secretary, said the programme would finance existing sugar estates, 10 proposed projects and supporting infrastructure needed to expand domestic production.

“About 70 per cent of the funding, estimated at five billion US dollars, is expected from long-term debt facilities and development capital,” Bakrin said at a news conference organised by the Commerce and Industry Correspondents Association of Nigeria in Abuja.

Export credit agencies are expected to provide three billion US dollars, while other development finance institutions are projected to contribute 1.75 billion US dollars. A further 250 million US dollars is expected from domestic development finance sources, with project promoters and operators required to provide the remaining 2.1 billion US dollars.

Bakrin said conventional commercial loans were unsuitable for the industry because of the long investment horizons and capital requirements involved. He cited interest rates of between 15 and 28 per cent on five-year loans as prohibitive for sugar projects.

The council has signed a one billion US dollar agreement with Chinese group Sinomach covering engineering, procurement, construction and financing, Bakrin said. The funds would be channelled to sugar estates once the projects reach financial close, when financing arrangements are finalised.

The NSDC has also developed similar engineering, procurement and construction financing frameworks with Chinese and Indian entities, although Bakrin did not disclose the amounts involved.

To prepare projects for investment, the council has established a 10 billion naira Sugar Project Acceleration Fund with the Bank of Industry. The fund is intended to finance feasibility studies and assessments of projects’ financial viability, which are needed to attract lenders and investors.

The council is also working with Afro-Asian Bank and other development agencies to facilitate funding for the programme.

Bakrin acknowledged that sourcing capital was not the council’s primary responsibility but said it had taken an active role in mobilising financing to advance the projects.

He said the council would be assessed against measurable outcomes, including the number of hectares cultivated, sugar output and the amount of financing secured.

Nigeria’s proposed investment programme seeks to expand domestic sugar production by combining the development of new estates with investment in existing facilities and supporting infrastructure. Its implementation will depend on securing long-term financing and bringing the proposed projects to financial close.

Source: FSX Business News