In this interview with Ifeanyi Onuba of THE WHISTLER, the Executive Secretary of the National Sugar Development Council, Mr. Kamar Bakrin, spoke on his strategic steps aimed at reversing the underperformance of the Nigeria Sugar Master Plan (NSMP) phase 1 as he leads the implementation of the NSMP II. He also revealed aggressive expansion plan that will force the creation of thousands of jobs in the industry. He also disclosed the details of a new performance evaluation template and innovative ways of tackling the perennial problem of community hostility among other issues. EXCERPTS.....Read The Full Article>>.....Read The Full Article>>
As the new Executive Secretary of National Sugar Development Council (NSDC). How can you describe your experience so far since you came on board?
I think first and foremost, I want to express my gratitude to Mr. President for deeming me fit to run such a strategically important agency. A strategically important agency that some people don’t even know it exists. It is actually one of the few sector development agencies that exist in the country. Not only sector development, but in the industrial space, it is actually one of the few.
And for someone like myself, who is particularly passionate about industrial development, it gave me a fantastic opportunity to develop what essentially is a model for Nigeria’s industrial development that can be deployed and leveraged in other critical sectors in our march towards industrialisation.
I no longer consider myself new. It has been seven to eight months now. And if you think about the life of an administration being four years, I can no longer call myself new. But in that time, there has been a lot of learning. And also, there has been a lot of opportunity to bring the benefit of one’s experience from the private sector. Coming from a strategic advisory role previously in government and to bring it to bear has been quite interesting. And through it all again, I’m extremely grateful to Mr. President. Because he has shown us unprecedented support in the sector so far. And we will talk about it in the course of this conversation.
We have seen the minimal success recorded by the Nigeria Sugar Master Plan (NSMP) I. Where are we now regarding NSMP II?
Industrialisation is the only way we can sustainably and in a guaranteed manner ensure optimal employment, that we can, can build resilience into the Nigerian economy, and that we can also ensure that we reduce the pressure on foreign exchange and ultimately through employment, improve the security situation in this country. So, it’s important to first of all, even get that very clear. Why is this good to highlight?
Because we are then fortunate that despite the shortcomings or the failures of NSMP I, the immediate past president, President Muhammadu Buhari, had the foresight to renew it. So, we now have NSMP II. And again, I’m also grateful to my predecessor for pushing for that to happen, because it had happened before I assumed office. It’s extremely important to also give kudos to him for the doggedness in which he drove that to make it happen, as well as those who championed NSMP I, even though it did not quite work out the way it was planned.
Now, it’s important to understand before we talk about what we’re now doing with NSMP II, what happened with NSMP 1. We have identified what the issues were. I think I might have shared bits and pieces of this with some of you at previous engagements, but it’s important to understand there were issues that were identified around the matters of non-viable sites for production, for growing sugarcane. These are some of the issues that we identified.
Inadequate capitalisation for some of the projects which impacted the ability to grow, properly develop them.
There were issues, serious issues, around poor incentive alignment by some of the operators who were given incentives, but unfortunately did not match the level of incentives with the level of effort and activity in terms of the backward integration program. These are some of the things that led to the underperformance of NSMP I.
We’ve taken all of these things into consideration in developing NSMP II. So, when we discuss the building blocks of NSMP II, you will see that all those things and all those lessons have been learned and internalised and incorporated. And we have then engaged stakeholders around all of these things to share with them, to discuss with them, and to take in their input.
And we have now entered a very aggressive phase of implementation of NSMP II.
Can you share with us the new innovations and strategies you are bringing to the sugar sub-sector?
The starting point for us, the NSMP II, remains our main vehicle for driving the development of the sector. So, it is critical to understand the components of NSMP II. It has three objectives.
Objective number one is attaining self-sufficiency in sugar production. And our target, in quantitative terms, is 2 million metric tons of sugar within the plan period. That’s number one.
Number two is recognising the fact that you cannot just attain this production without also giving thought to the economics behind it.
So, our second objective is to be Africa’s most cost competitive sugar producer. Number three is ensuring that we develop a highly sustainable sector by ensuring inclusiveness in our strategy. So, those are the three objectives.
One is ensuring self-sufficiency, one is ensuring that we achieve it in a cost competitive manner, and three is that we achieve it in a sustainable and inclusive manner.
Now, it has seven pillars, as it were. I will not bore you with all the details that can provide the information, but it’s important to highlight a number of them. One, I mentioned before that we learned a lot of lessons regarding unviable sites.
So, a critical part of this is an extremely robust approach to identify, find viable sites for sugar production. Viability for us comprises a whole number of criteria and factors.
For example, the soil condition, where the location lies within the climate belt, to ensure that not only can it produce sugar, it can produce sugar at economically competitive volumes.
Ensuring that the site has access to water, ensuring that the host communities are receptive of a sugar project, you don’t take it for granted.
So, it is now a factor. And I will explain why, when you realise that some communities might agree in principle, until you are ready to deploy and they say no.
So, ensuring that all those things in place, that is, viability of the site.
A second pillar of our NSMP strategy is the attraction of well-motivated, capable investors into the sector. That is a critical component of this.
A third one is recognising the fact that the capital requirement for this is significant. We recognise the fact that some of that has to be equity, some of that have to be debt, but not any kind of debt. It’s not the kind of money you borrow from Moinepoint or from Zenith Bank. It is development finance. Essentially, long term cheap capital is what we need to develop the subsector. So that’s a component of the NSMP II.
Also, a strong focus on research and development is another component. We also are working on de-risking sugar investment projects through the provision of infrastructure and other forms of derisking for the subsector. Yet another component is something I touched on earlier. To ensure inclusivity, we are working on ensuring host community participation in the sugar project.
And then a second element is a very robust approach now to monitoring and evaluation. Independent tech-enabled approach to monitoring and evaluation that then ensures that we have sufficient information to be able to properly ensure safety incentive alignment with the operators of the backward integration programs.
You spoke about viable sites for sugar production. How many of those sites have you identified?
There are two ways to it. I mean there are two levels to think about that even with the current operators, a lot of them, not a lot of them. Even all the current operators, these current sites they are on, there’s significant space for expansion in the sites that they have acquired. So, we have essentially four, or if you want three and a half operational sites today. That is Numan in Adamawa by Dangote. There is Sunti in Niger State by Flour Mills of Nigeria.
And then there’s Lafiagi operated by the BUA group. And of course, we have the bachelor site not too long ago acquired by the KIA group.
Within each of these sites, there are significant, significant opportunities for expansion because what they’re currently cultivating is quite a relatively small portion. So, there is that. In addition to that, we have tentatively identified 18 greenfields, I mean additional 14. Let’s call it in total of an additional 14.
What we call Greenfield sites are those that have not previously been cultivated. And they range in size from about 6000 to as much as say 18,000 ha across the sugarcane belt that we have identified. Now, there is additional work that needs to be done to ascertaining the full viability. Remember, initially I spoke about the criteria for viability. So, there are about 14. Each of these have promoters of their own with varying degrees of capacity to develop it.
Our plan of course is to support each and every, every one of them. You know, for those where we deem the sites are generally viable, where we’ve done thorough due diligence on these promoters to ensure that they are credible to support them in terms of getting these projects to full sugar production site.
Where is the country now in terms of sugar production?
We are at about 50,000 metric tons today, and we are targeting 2 million metrics tons in the next eight years. That’s the plan. So, I don’t know if that answers the question. So, we’re currently at about 50,000 metric tons, which currently comes out of two sites. Numan and Sunti are where we see local production today.
Community hostility has been a problem over the years. What are you doing differently to curtail it?
We have come to recognise that this is not something you you treat as by the way. So, it is a fundamental component of the NSMP II. Within NSMP II, part of what we’re doing is, as I mentioned at the beginning, before you deem a site as viable, you ensure community acceptance. We need to ask the community if they want the project or not.
We will educate the communities on the economics of sugar production, how it makes money, how it helps the community, and so on, with proper education, infrastructure, etc.
Number two, inside the NSMP two, we have included targets for community, for CSR.
We have included targets. So, we are mandating a specified amount of capital that must be dedicated to community development, roads, schools, clinics, whatever makes sense for that community. So, that’s another component.
A third component is we’re also mandating a certain amount of recruitment that must come from the host communities, as well as the catchment area for both field operatives, junior staff and workers, and so on, as well as for managerial staff.
And we have already engaged the operators around this and we have gotten their buy in.
On top of all of this, we are also creating within the Council, essentially a directorate level stakeholder management department that is going to be directly responsible for stakeholder management. So, this is both in terms of host communities as well as inter-governmental engagements. I mean, other government agencies and departments, ensuring that we are able to bring them on board and provide a one-stop shop solution to the challenges our sugar operators are facing. Engaging state governments is also part of it.
These we have already started, by the way, where we have gotten a lot of very good engagement with the governors of the host states. I think we have met all the states in which we are active. We have met with all the governors like Nasarawa State, Adamawa State, Kwara State and Niger. We’ve had very fruitful discussions. We’ve gotten their commitments. Not only are they giving verbal commitments, they have actually delivered. So, for example, one of the operators had an issue with 2000 ha land, which the host community was denying them access to the to develop and plant came there.
We met with the governor, we explained to him what we’re doing and so on and so forth, and he set up a committee and that has been resolved and that land has been handed over to the operator to develop.
You have spoken well on the NSMP II. So, what can you tell us the specific year Nigeria can achieve all the key target?
First of all, it’s important to recognise that sugar projects have like a five-year gestation period to get to proper steady state of production. Our target is ten years. But we are on a sprint. We are on a race. So, it’s a 10-year period, you know, which we expect to deliver this. And we pray that God spares our lives, even if we are no longer in office, that at least the foundation we are going to lay would have gone very, very far to deliver this. And there will be no turning back then.
What has been the impact of the general economic downturn on the sugar subsector?
Global supply chains impacted so many things. In the case of sugar, there are also two other components that came up. One is the adverse weather conditions experienced in critical sugar growing countries like Mexico and India, which has led to a contraction in global supply.
All these things drove increase in sugar prices. So, when we saw it in Nigeria, it was not a local thing. People thought it was price gouging and so on. But no, if people had just paid a little bit more attention, you have seen that global sugar prices actually went up in dollars coupled with our own extra challenges. That is what we then saw. Of course, we know what’s going on with consumer pockets in Nigeria. So, there’s also been that added impact of, you know, sort of the whole devaluation and so on and so forth.
So, it has impacted consumption and it has affected the fortunes of the industry to some extent. But there’s a silver lining to this particular cloud. The devaluation in a very interesting way has made local production a lot more attractive because it has become so much more expensive to import sugar. All of a sudden you realise that if you produce it locally, you can compete with imports. You can see how it has become a blessing in disguise. So, we have, on the one hand, the negative impact of the global macroeconomic forces. But then you also have the positive impact it has had on the prospects of local production. I think you get what I’m trying to say. So, because to land sugar now has become a lot more expensive. So we can then potentially be able to produce better.
What immediate satisfaction are Nigerians expecting from your reforms?
You are going to see a lot of employment because each of the sugar operators have very aggressive expansion plans which we have seen an we have also engaged them on what they need to do.
So, you see, and that will translate into of course, a lot more people being recruited. You’ll see a lot more economic activity. You know, both in terms of logistics and so on and so forth in the sugar producing estates, and it will translate into jobs for the local communities, for suppliers, for contractors and all of that, because everybody is now scrambling to move.
They are laying irrigation pipes, they are completing other infrastructure, they are expanding their factories and rehabilitating them and so on and so forth. So, you see a lot of that. Of course, we will still continue to import sugar for some time. I told you, it has quite a significant gestation period, but at least we will see those benefits in the immediate time in terms of numbers. And you know, there’s nothing better than employment. I can sit down and promise you we’ll crash the price of sugar and all that. But jobs are the real things.
How many jobs are we planning to create in the next one year?
Thousands. These are good quality jobs, by the way, because some of them are factory jobs. Yes, some of them are farm jobs, some of them are seasonal. But there are quite a number of factory jobs that will be created, you know that is sustainable. And the economic impact of that is going to be very significant.
In that case, are there plans to establish additional sugar estates?
Absolutely. I told you we have discovered 14 new greenfields. We’re working with them, you know, to get them to become properly bankable. And you see in the next few years they are turning into real estate. I mean, to real projects. The existing guys, the four people I mentioned, at least three of them are expanding their current locations as well as new locations in other states. So, Dangote, for example, is expanding Numan and is also putting in another site in the Nasarawa state, in Tunga. Flour Mills, is expanding its current site in Sunti and also creating a site called Sunti Upland, where it’s also going to be developing. So, there’s a lot of activity. BUA is doing a massive upgrade, I mean, expansion of its facility in Lafiagi, you know, so you see a lot of. Stay with us, stay close to us. We’ll visit some of these places in a few months. You will see the level of activity because there is a lot incentive for them to perform.
You spoke about long term funding for the sugar, short term funding from the commercial banks. What is the level of synergy between NSDC and banks like BOI to unlock cheap funding for this?
You know, BOI is a default banker, so to say, for NSDC, that is where, for example, our sugar development levy is domiciled. I mean the money that we use to fund our activities and so on and so forth when it is remitted to us.
So, there is that level of already existing collaboration. But even our sister agency, Nigeria Investment Promotion Commission (NIPC), we have been having a lot of engagements with them. We shared with them our materials in terms of our strategy as well as our fundraising plans, so that we can work with them to attract investors to the sugar subsector. But we are going to be starting a roadshow in the next few weeks that is, going round the development finance institutions.
Are you thinking towards the direction of intervention funds for sugar operators?
Yes. We are aware of the fiscal constraints that the country faces. But at the same time, we also know that, quite frankly, we believe that there are no better investments than putting money in industrialisation. So, we are indeed approaching our father, the federal government by extension, Mr. President, around intervention funds specifically geared towards provision of irrigation infrastructure, which is very, very critical to the success of this subsector. So that is an ongoing discussion that we’ve already started with the support of the Honourable Minister of Trade, Industry and investment.
ENDS
