Tanzania can become Africa’s hub for sugar

Tanzania has the potential to become a hub for domestic and industrial sugar if it takes advantage of the existing opportunities, including huge arable land, according to trade and agricultural experts.

They argue that sugarcane can grow in most parts of the country, hence providing the key potential for sugar production, all is needed is strategising and putting in the requisite investment and engaging stakeholders, including sugarcane growers.

The experts told BusinessWeek separately also that sugar companies have the opportunity to help the nation reduce the import of large quantities of sugar for industry and even table consumption by utilising the many sugarcane farmers in sugar processing.

In February, Agriculture Minister Adolf Mkenda said there were many sugarcane growers but it was unfortunate that not all their produce was used for sugar production, creating the shortage.

“Tanzanians are surprised that we have farmers producing enough sugarcane but we are still importing sugar,” Prof Mkenda was quoted as saying.

Prof Mkenda, who visited Kilombero Sugar and talked to farmers in Morogoro, hinted that 2021 could be the last year for companies to import the sweetener, saying that as it is sugar imports were cheaper but the business had become like “drug dealing.”

“Sugar is starting to look like drug dealing or mafia. We want it to be imported by these companies but for the last time this year. The sugar board will start importing sugar,” he said.

Prof Mkenda, however, noted that the crisis of sugar in the country was not due to lack of sugarcane but the lack of investors to process sugarcane.

Currently, the factory – which produces 128,000 tonnes of sugar per year as Kilombero Sugar Company – is owned by private investor Illovo, holding 75 percent of the shares, with the remaining shares owned by the government of Tanzania.

For instance, recent reports indicate that Tanzania’s demand for domestic sugar was 470,000 metric tons (tonnes) per year, while the country’s five sugar processing factories had the capacity of producing 378,000 tonnes in 2019.

The increase in the number of new industries that use the sweetener as raw material has raised demand for both table and industrial sugar in the country by over 16 percent, from 610,000 tonnes in 2018 to 710,000 tonnes in 2019, according to reports.

Currently, data shows that demand for industrial sugar stands at 165,000 tonnes while that for table sugar is 545,000 tonnes with Kilombero Sugar Company Limited producing 134,000 tonnes.

“Why does this situation occur when we are able to produce enough sugar for table and industrial use?” Queried Dr Abdul Nkya, an agribusiness expert based in Dar es Salaam.

He said if the local processing industries are determined to take advantage of the opportunities of existing farmers and many others interested in investing in sugarcane cultivation in parallel with the government enforcing a policy to curb unproductive sugar imports, then Tanzania would be one of the main exporters of both industrial and table sugar.

For her part, Dr Marylina Mbagga, an agricultural consultant, says the presence of five sugar factories in the country is a huge opportunity that only needs coordination and a good business environment.

“At the moment, it is clear that the government has promised to improve the business environment, thus providing an opportunity for investors interested in processing more sugarcane from farmers to do so, but the politics in sugar must be controlled,” she explained.

Begin with recent development

Tanzania’s goal has so far been to become sugar self-sufficient by 2025, a move that is precipitated by constant sugar shortages in the market. The move received a huge boost following some industries coming up with strategies that would eventually help in the realisation of the country’s 2025 goal.

For instance, Kilombero Sugar says it plans to increase production by 144,000 tonnes from current levels of around 127,000 tonnes of sugar per annum, to 271,000 tonnes.

A driving force behind manufacturing expansion, they say in an interview with BusinessWeek, would be the almost three-fold increase in cane supply from the company’s small-scale growers, from 600,000 tonnes currently to 1,700,000 tonnes.

“Importantly, the proposed new sugar factory has been sized so that all of the available cane will be crushed by the end of December each year, in order to minimize disruptions and losses often caused by the onset of the rainy season,” says communications director of Kilombero Sugar Company, Mr Joseph Rugaimukamu.

The country currently produces less than 470,000 tonnes of sugar annually, but the government expects production will jump to 700,000 tonnes of table sugar by the 2024/25 farming season.

The government also expects that the sharp rise in sugarcane production will go hand in hand with increased investment in processing capacity.

The approval of the new varieties (suitable for local soil) was made in January this year. It came at a time when sugar factories at Kagera, Bagamoyo, Kilombero, Mukulazi-I and II were undergoing expansion.

Mr Rugaimukamu also says the company would have a 4,000 kilolitre increase in the production of ethanol at the adjacent ethanol distillery, bringing total annual production up to 16,000 kilolitres in order to meet growing local and East African export demand for potable alcohol.

“President Samia Suluhu Hassan’s profound commitment to creating a conducive environment for accelerated private sector growth, underpinned by firm protective measures for the local sugar industry, have been decisive in securing approval of shareholders for this transformational project in the country,” says the chairman of Kilombero Sugar Company, Mr Amy Mpungwe.

He notes that the total number of small-scale farmers supplying cane to the expanded company sugar factories will increase from 7,500 to between 14,000 and 16, 000 growers, thus positively impacting directly an additional 50,000 people in the Kilombero Valley.

According to a shareholder of Illovo Sugar Africa, Mr Gavin Dalgleish, the investment in the expansion project is their biggest to-date across the continent.

“We are proud to be partnering with the Tanzanian people in a landmark investment aimed at reducing the amount of sugar imports into the country every year, to meet consumption demand,” he notes.

Mr Dalgleish adds that, by effectively reducing sugar imports by 144,000 tonnes, their estimates are that Tanzania would be saving $71 million in foreign exchange a year.

Focus on industrial sugar

Bearing in mind that industrial sugar is still the most imported cane product, Dr Yusuph Mbasha, a development partner and former staff at one of the country’s sugar factories, says the idea of producing industrial sugar should not be forgotten as the country has a huge potential to do so.

“If the current expansion plan goes well, I am sure that the problem of table sugar shortage in the country will be curbed even though this product has been faced with lots of politics in the past,” says Dr Mbasha.

“These initiatives must highlight industrial sugar as well as it could be an opportunity for our nation. What we need is a huge investment from other private sector stakeholders so that we can live the industrial economy dream fully,” he adds.

However, Mr Rugaimukamu says that, to begin with, they must ensure that table sugar which has been a constant concern for Tanzanians, is available in the market before starting to produce industrial sugar.

“We cannot start production of industrial sugar at a time when there is still demand for table sugar which we have not satisfied. In this expansion, we aim to start with table sugar and then later we will start producing for industries,” he says.

For his part, Mr Moses Mbwana – a sugarcane grower in Bagamoyo District – says if they are helped and motivated to increase production, they will be able to help the nation achieve its goal of producing enough sugar for domestic and industrial use.

“Basically, it is a strategy to uplift and give the farmer reason to see that sugarcane cultivation is an opportunity. We need our sugarcane to be processed as we can produce even more and make Tanzania a hub for sugar globally,” believes Mr Mbwana.

Already, efforts have been made to make sure that imported sugar is reduced, and that local production is increased.

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