NIGERIA – Reviving economic activity in Africa’s most populous nation means Nigerians are indulging their sweet tooth again.
Sugar demand from both businesses and households is rising after last year’s downturn, according to Dangote Sugar Refinery Plc acting Managing Director Abdullahi Sule.
Nigeria’s top sugar producer, owned by Africa’s richest man, Aliko Dangote, forecasts its sales volumes could rise as much as 25 percent in 2018, Sule said.
Nigeria’s economy, which contracted in 2016, is recovering after the government relaxed some currency controls implemented after the price of oil, its main export, crashed in 2014.
The changes have helped ease a scarcity of dollars, which manufacturers require to import raw materials.
“As companies begin to recover, we’re seeing an increase in what they buy from us,” Sule said in a Jan. 17 interview at the company’s headquarters in Lagos, Nigeria’s commercial hub.
“Confectioneries, bakeries and beverage companies have increased their demand.”
After Dangote Sugar’s sales volumes dropped 17 percent in the 9 months through September, to 507,185 metric tons, the company is forecasting an increase of 20 percent to 25 percent in 2018, he said.
Profit may rise 15 percent to 20 percent compared with 2017.
The company targets producing about 1.08 million tons of white sugar annually in the next five years and 1.5 million tons per annum in the next decade, Aliko Dangote said in June.
His Dangote Group, best known for its cement business, has been investing in agriculture as Nigeria’s government seeks to make the country self-sufficient in food.
The economic upturn means Nigeria rejoins other emerging markets where sugar consumption is rising, driven by burgeoning middle classes and growing populations.
However, U.S. and European consumers have cut back on demand and global consumption edged up just 0.2 percent in the year ended Sept. 30, according to data from Tropical Research Services.
White sugar has dropped more than 30 percent in London in the past 12 months and hit a two-year low on Friday amid signs that a global glut is set to grow even bigger.
Dangote has taken advantage of cheaper raw sugar to reduce its retail sales price, which should help boost sales, Sule said.
The company last year focused on reducing costs, which will help increase profit as demand rebounds, Sule said.
Energy expenses were cut by about 60 percent after it switched to natural gas rather than fuel oil to fire plants.
Cheaper foreign exchange will also result in savings as the dollar supply improves, he said.