Illovo sugar doubles sugar production in Tanzania, commences US$238.5m expansion project

TANZANIA – Illovo Sugar Africa, a Pan-African consumer centric agri-business with roots in growing and making sugar and related products, has announced the commencement of its Tsh 571.6 billion (US$238.5 million) expansion project in Tanzania.

According to the giant sugar processor, the planned investment at its Tanzanian unit, Kilombero Sugar Company, co-owned alongside the Government of the United Republic of Tanzania having 25% stake, has been in the pipeline for a number of years.

Following the obtention of the go-ahead, this new development will increase Kilombero’s sugar production by 144 000 tons from current levels of around 127 000 tons of sugar per annum, to 271 000 tons.

This is in line with the country’s policy to achieve self-sufficiency by 2025 to reach 700,000 tons from the current 368,000 tons.

“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,” Chairman of the Kilombero Sugar Company, Ambassador Ami Mpungwe said.

The project construction phase is expected to take 25 months and completion is expected in July 2023.

Importantly, the proposed new sugar factory has been sized so that all of the available cane will be crushed by end of December each year, in order to minimise disruptions and losses often caused by the onset of the rainy season.

Other than meeting the rising customer demand of Kilombero’s leading Bwana Sukari product range, the project will also feature construction of additional sugar storage and packaging facilities in order to reduce costs and increase the company’s branded pre-packaged capability.

“We are tremendously proud to be partnering with the Tanzanian people in what is a landmark investment aimed at reducing the amount of sugar which has to be imported into the country every year, to meet consumption demand.

Gavin Dalgleish – Group Managing Director at Illovo Sugar Africa

Also, there will be cogeneration of electricity for the Kilombero manufacturing complex and for export to the national Tanzanian grid.

A 4 000 kilolitre increase in the production of ethanol at the adjacent ethanol distillery will be realised, bringing total annual production up to 16 000 kilolitres in order to meet growing local and East African export demand for potable alcohol.

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The project will be of high economic importance as total taxes of Tsh 66.8 billion currently paid by the company are estimated to increase three-fold as a result of the expansion and improved business performance by 2028.

Kilombero Sugar Company’s total contribution to the economy will more than double from the current Tsh 340 billion per year to an estimated Tsh 750 billion.

“We are tremendously proud to be partnering with the Tanzanian people in what is a landmark investment aimed at reducing the amount of sugar which has to be imported into the country every year, to meet consumption demand. 

“By effectively reducing sugar imports by 144 000 tons, our estimates are that Tanzania will be saving US$71 million in foreign exchange annually,” said Gavin Dalgleish Group Managing Director at Illovo Sugar Africa.

A driving force behind the manufacturing expansion will be the almost three-fold increase in cane supply from Kilombero’s small-scale growers, from 600 000 tons currently to 1 700 000 tons. 

This will in turn translate to an increase in the total number of small-scale farmers supplying cane to the expanded company sugar factories from 7 500 to between 14 000 and 16 000 growers, thus positively impacting directly an additional 50 000 people in the Kilombero valley surrounding the sugar operations.

The significant increase in cane volumes supplied by Kilombero growers will triple the revenues paid to them to around Tsh 270 billion by 2028.

Further to that there will be an increase in direct employment by over 2 000 jobs both at the company and through the expanded grower cane supply.

The investment is an addition to the already US$166m injected into the company over the past 20 years.

Today’s announcement demonstrates the continued support of Associated British Foods, parent company of Illovo Sugar Africa, and their confidence in the continued growth of its African manufacturing subsidiary.

Illovo Sugar Africa is the largest sugar company in Africa with sugar and related operations in 6 countries in south and east Africa.

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