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Dangote Sugar’s investment in BIP revolution in job creation ― NDE

Dangote Sugar’s investment in BIP revolution in job creation ― NDE

The huge investment by Dangote Sugar Refinery in the Sugar Backward Integration Policy (BIP) of the federal government has been hailed by the National Directorate of Employment (NDE), which described its job creation potential as humongous.

Director-General of NDE, Silas Agara who commended the Chairman of the Company, Aliko Dangote during his visit to Dangote Group pavilion at the ongoing Kano International Trade Fair, in Kano said his commitment to the BIP towards achieving Sugar sufficiency in Nigeria is unparallel and worthy of emulation.

Dangote Sugar has so far committed over $700m dollar to the BIP to stem the national annual sugar import of over $337million, so as to ensure Nigeria attains national sugar self-sufficiency which will in turn revolutionalise the economy of the nation as other people-oriented infrastructures would come with the sugar projects being undertaken under the BIP.

Agara who is a former Deputy Governor of Nasarawa State, said Dangote’s commitment is critical for development of sugar industry in Nigeria noting “Dangote Sugar in Tunga in Awe Local Government of Nasarawa State is commendable for improving the Communities in Tunga. It has created job opportunities for the teaming youth and improved livelihoods.

“Nasarawa is proud of Aliko Dangote. Tunga Sugar is a spinner for Nigeria’s economy”, the NDE boss declared while urging the business mogul to step up community advocacy, and more collaboration with stakeholders to drive greater positive change in the Communities.

He noted however, that, “There isn’t any dissenting voice on Tunga sugar, and the communities have enjoyed growth and development through the company Corporate Social Responsibility (CSR) strategies” but call for more of the CSR projects.

It would be recalled that the members of Nasarawa State House of Assembly recently paid a visit to the Dangote Sugar Tunga BIP project which they described as a blessing to the state going by the vast expanse of the project

The Dangote’s Sugar Master Plan, and the company’s commitment to the sugar projects in Tunga, Awe local Government of Nasarawa, and that of Numan, in Adamawa State have scaled up the drive towards realization of National Sugar objectives.

Dangote Sugar refinery recently unveiled plans to produce 700,000 metric tonnes of refined sugar from locally grown sugarcane in the next four years, through its Backward Integrated Programme (BIP).

Chairman of the Company Aliko Dangote had during the Annual General Meeting of the Dangote Sugar, said the management was focused on achieving the revised targets set for DSR Numan operations, Dangote Adamawa Sugar Limited, and Nasarawa Sugar Company Limited.

He then expressed the hope “Dangote Taraba Sugar Limited, Lau/Tau project would also come on stream soon.

Nigeria is one of sub-Saharan Africa’s largest importers of sugar second only to South Africa, but the Dangote Sugar management assured that by the time the company fully completes its sugar projects in Nasarawa and Adamawa under the BIP, the nation would be saved of more than half of the forex expended on sugar imports annually.

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Moody’s affirms Dangote Sugar Refinery’s Caa1 CFR, Outlook changed to stable

Moody's affirms Dangote Sugar Refinery’s Caa1 CFR, Outlook changed to stable

Moody’s Ratings (Moody’s) has affirmed the Caa1 corporate family rating (CFR) of Dangote Sugar Refinery Plc (DSR), Concurrently, Moody’s has repositioned the national scale rating (NSR) to Ba1.ng from Baa3.ng. The rating outlook has been changed to stable from positive.  Dangote Sugar Refinery is the largest Sub-Saharan African sugar producer and refiner based in Nigeria.

The global rating agency attributed the change to the negative impact of the Naira devaluation on the operations of DSR.  The rating agency in a statement said, “the affirmation of DSR’s Caa1 CFR and change in outlook to stable with the repositioning of the NSR to Ba1.ng reflects Moody’s view that the company’s raw material import business model continues to be negatively affected by the sharp devaluation of Nigeria’s currency, the Naira, against the US dollar during the last 12 months. The currency devaluation has deteriorated DSR’s liquidity position and materially increased its letters of credit (LoC) in Naira terms, weakening the company’s credit profile.”

It should be noted   in June 2023, the Central Bank of Nigeria (CBN) announced the unification of its multiple foreign exchange windows, merging all official rates into its Investors and Exporters window which has significantly devalued the Naira, particularly in June 2023 and February 2024 from around 460 Naira per USD in June 2023 to around 1,500 in February 2024.

The positive action to be taken against the headwinds of the currency situation in Nigeria is to focus on the Backward Integration Plan for sugar production in Nigeria. DSR has made significant investments and will continue to grow its size of the local sugar production capacity. Given the devaluation of the currency which has made locally produced sugar to have significant profit margin compared to imported sugar. DSR has intensified production activities at its Numan and Nasarawa sugar plantation. The positive action to be taken against the headwinds of the currency situation in Nigeria is to focus on the Backward Integration Plan for sugar production in Nigeria. DSR has made significant investments and will continue to grow its size of the local sugar production capacity. Given the devaluation of the currency which has made locally produced sugar to have significant profit margin compared to imported sugar. DSR has intensified production activities at its Numan and Nasarawa sugar plantation.

According to Moody, factors considered in the rating of DSR include the positive industry fundamentals supported by government regulation and Nigeria’s demographic and societal trends,  DSR’s market positioning as Nigeria’s largest manufacturer and seller of refined sugar, low levels of Moody’s adjusted debt of NGN62 billion excluding letter of credit; and  track record of adequate operating margin of 18 percent  over the last five years and capacity to pass through additional costs albeit with a lag.

Also, the ratings  according to the agency, reflect the company’s exposure to Nigeria, a country that has high social, political, economic and regulatory risks;  high exposure to foreign currency risk exposure due to hard currency imports and local sales under a depreciating Naira currency scenario; exposure to commodity price risk volatility through raw material imports of sugar; (4) high reliance on letters of credit of NGN420 billion as of 31 March, which are interest bearing and used for hard currency working capital financing; and  weak credit metrics driven by a weaker than expected operating performance and large foreign currency losses.

“The stable outlook reflects our expectation that DSR’s volumes will grow towards the levels achieved in 2022 over the next 18 months. The stable outlook also assumes that the company’s outstanding letters of credit with banks will be rolled over and not increase in size, Moody’s Rating concluded.