By Oduche Azih
THE SUGAR SPAT
Does any one out there follow the latest competing ideas about healthy COMPETITION in business? As for me I religiously follow Prof Robert Reich, former US Secretary of Labour and now at UC Berkely.
If you have many, (a good number of ), balanced competitors for a commodity as cheap and commonplace as sugar, you do not stay up at night worrying that someone or a small powerful group would “suspend (its) sale of sugar to drive artificial scarcity”!
I have followed the world of sugar for decades now. Very few people know that for most of the time the world faces a sugar glut, with countries in the EU propping up their criminally unprofitable beetsugar producers with a slate of agricultural subsidies. Mind you, they resent any African nation doing anything close. These are part of the reasons why the people of the Fiji islands, after slaving away at the farms, the nation has zero prospects of striking it rich.
Kindly read Chukwuma Charles Soludo: FROM BERLIN TO BRUSSELS: Will Europe Underdevelop Africa Again?
Without giving him credit, the former Chairman and CEO of the UBA Group, Tony Elumelu had borrowed extensively from this in an address on the sidelines of the UNGA several years ago.
The point here is that what we have in Nigeria is a SUGAR WAREHOUSING AND DISTRIBUTION cartel. Nothing more. I mentioned a perennial sugar glut earlier on. The major South African operators out of Durban and Port Elizabeth probably don’t have the typical Nigerian latitude to increase prices WHEN THERE IS A GLUT!
Now most ignorant observers crow jubilantly when say a Dangote takes over a dead government funded Sugar Estate/Plantations with no idea of the acreage, maximum potential yield in the best of circumstances and the best scenario impact on supplies. This is often in the realm of 3 to 5%, but most people don’t know this. Hence by holding onto Savanah, Sunti and other estates, these Nigerian trading moguls, simply establish PR Outposts, where they wave their flags, mimicking purist interests. THEN THEY GET TO MAKE THE RULES! Haba! Can’t we see?
This has been happening for decades in the Downstream Petroleum Sector where till tomorrow we don’t get to know who among the friends of government import clean or dirty fuel on its behalf, and how the humongous proceeds are shared. We clearly need a Jerry Rawlings here, I swear! .
Let’s take a look at the JOSEPHDAM example. I don’t know who their financial advisers were, but to imagine that the company took over the Bacita Sugar Estate, in Niger State, too small to ever be profitable going by standard management structures, and yet hoping to run the place at arms length, choppering in from Lagos ever so often, was truly insane. That sad and most painful air disaster only truncated a potentially miserable next couple of years. . The typical sugar farm managers in Fiji would get to leave the island for holidays or any other reason perhaps once in five years, so razor thin were the profit margins. . Has anyone seen the financial reports of these Sugar Planations taken over years ago by our supposed benefactors here in Nigeria?
My conclusion is that the undeserved credit we heap on Aliko Dangote and Isyaku Rabiu is why we faultily keep them centre-stage in this discussion about Sugar Prices, up or down? We needed to have shot them down years ago. Note that their co-conspirators embedded at several layers of government have the form of extremist(?) religious sleeping cells. They’ve been there long before Buhari and have been growing in clout. Much as the President may appear more receptive to any trading cartel with a northern flavour, they are not necessarily Buharideen in the usual sense.
This is business!
It is noteworthy that when the Blue Circle Group, owners of WAPCO, were drawing circles around us over cement, Dangote and other traders didn’t find its shenanigans funny or acceptable. WAPCO, now Lafarge, is foreign. Now, concerning sugar, the shoe is on the other foot. Unfortunately Nigerians don’t seem to know this.
Oduche Azih
Lagos
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