Josepdam Sugar Company, formally known as Nigeria Sugar Company in Bacita, Kwara State, used to employ about 40,000 workers before it became moribund. A look at the challenges of reviving the multibillion-naira firm and the economic implications for the country
The days of glory
For many years, the Nigeria Sugar Company, Bacita in the Edu Local Government of Kwara State was the pride of the people and the nation.
The company, also called Bacita Sugar Company, had over 30,000 hectares of sugarcane farm with a production capacity of 300 metric tonnes of sugarcane per day.
It had a huge sugar refining capability and was well positioned for backward integration in planting, harvesting, milling and processing.
In its heyday, products from the company were readily in the market, and Nigerians patronised them. The economy raked in huge revenues from the products for many years.
The decline
Unfortunately, the story changed. The situation on the ground now is nothing but a sorry sight as the company had since gone under.
The few workers left at the place have not tasted sugar from the factory for many years. Even their wages for over three years have remained unpaid, a situation that has continued to subject them to an unending hardship.
NISUCO was one of the first sugar companies in Nigeria that lost its glory when Nigeria discovered oil in commercial quantities, and started shifting focus from agriculture.
The firm began setup in 1964, few years after oil was discovered in large quantities in Oloibiri, Bayelsa State in 1956. But while the oil sector has enjoyed immense attention of the government, the reverse has been the case for the agricultural sector.
According to figures from the National Sugar Development Council, annual sugar production in Nigeria fell from 41,478 tonnes in 1990 to 12,104 tonnes in 1996. It rose to 15,805 tonnes in 1997; fell to 9,850 tonnes in 1998 and rose back again to 55,000 tonnes in 2007, and at about 30,000 tonnes in 2018.
The consumption has, however, continued to maintain a steady rise from a figure of 645,248 tonnes in 1990 to about 1,246,110 in 2018.
In 1990, Nigeria spent $268.68m on importation of sugar, but the annual amount spent stood at $337.31m as of the end of 2018, the NSDC statistics revealed.
In the past years when oil prices fell in the international market, the government introduced some short-term measures to cushion the effects on the economy.
Some of the measures included the devaluation of the naira and the introduction of austerity measures, which had not enjoyed long-term plans to stop the reoccurrence of such economic challenges.
The Governor, Central Bank of Nigeria, Godwin Emefiele, spoke on the need to diversify the economy and reduce dependence on oil revenue.
He said the significant drop in the price of the Bonny light, Nigeria’s crude, from $115 per barrel in June 2014 to $31 per barrel by January 2016, exposed the structural vulnerabilities of an oil-dependent economy.
He said that in October 2014, the US Federal Reserve commenced the tapering of its quantitative easing programme towards a more conventional monetary tightening cycle.
This decision, he noted, led to acute capital flow reversals, especially from emerging markets and heightened financial fragilities in these countries.
Emefiele said, “Unarguably, the most important of these factors to impact the Nigerian economy was the plunge in crude oil price.
“Nigeria’s overdependence on crude oil for over 60 per cent of fiscal revenue and over 90 per cent of foreign exchange inflows meant that shocks in the oil market were transmitted entirely to the economy via the FX markets as manufacturers and traders who required FX for input purchases were faced with dwindling supplies.
“Average monthly inflows of the FX into the CBN fell from over $3.4bn in June 2014 to a low of $1.4bn in September 2016. The decline in the FX earnings was further complicated by the foreign capital flow reversals due to rising yields in the United States of America. The impact of these on our economy was evident in the rising pressure on the naira-dollar exchange rate.
“With the drop in the FX inflows, the exchange rate at the parallel market rose from about N200/$ in August 2015 to N525/$ in February 2017. Inflation also rose from 9.6 per cent in January 2016 to over 18.7 per cent in January 2017.
“Our external reserves fell from about $31bn in April 2015 to $23bn in October 2016, and activities in the industrial sector witnessed a lull as manufacturers struggled to get access to key inputs needed in the production process.”
Emefiele said other vulnerabilities included slowdown in government spending (following the fall in government revenue), build-up in the demand for foreign exchange and high exposure of the banking sector to the oil and gas sector.
Driven largely by the downside effects of these shocks, he said, real gross domestic product growth plunged sharply from 6.2 per cent in 2014 to a 1.6 per cent contraction in 2016.
He said, “Nigeria effectively slipped into a technical recession in the second quarter of 2016 and maintained negative growths in the ensuing quarters of that year. Disaggregation of the 2016 outcomes showed the worst contraction of 2.4 per cent in quarter three and a turning point thereafter.”
But amid economic challenges caused by fluctuations in oil prices, experts have said that sugarcane production is an area of agriculture that has huge potential to increase Nigeria’s exports, generate foreign exchange, provide sugar needs of Nigerians and create employment for diverse skills in the country.
NISUCO
While speaking on the sugar company, a former Assistant General Manager, Agric Operations, NISUCO, Mr Funsho Makanjuola, said the company used to be an employer of over 15,000 workers during off crop season, and over 40,000 workers during the crop season.
He said that then, there was irrigation technology being carried out by Nigerians in the country, which could be used in other spheres of agriculture.
“All Nigerians from all the states converged on Bacita during the crop season to make a living,” he said.
According to him, NISUCO produced about 36,000 tonnes of sugar during its existence.
He said, “Agricultural engineering was at its best during the existence of NISUCO. It was a training ground for all university undergraduates on industrial training.
“Some of those I trained are directors in parastatals all over the country. The factory was a training ground for chemical and mechanical engineers. The agronomy department carried out researches that helped to select suitable varieties for our climate and conditions.”
According to him, sugar cane is grown for 12 months, and usually in an area that has about six months of rainy season and six months of dry season.
The essence of the six months of rainy season, he said, was to nurture the cane to a certain stage with enough water to grow, and the dry season stage is to help its harvest.
He explained that in the dry period, some of the canes not harvested must be watered with irrigation.
According to him, if NISUCO was revived, and all the infrastructure made effective, the company would produce jobs for a lot of unemployed Nigerians.
“We are a large importer of sugar. People keep importing sugar from other countries and generating employment outside while our own people are jobless,” he said.
Josepdam
Despite the oil boom and huge revenue to the government after Nigeria’s independence, many of the public enterprises in the country which were enjoying funding started operating at a loss after some years.
They suffered poor management, embezzlement and waste of resources among others, possibly because of the notion that what belonged to the government belonged to nobody.
As the government could no longer bear the monumental waste and inefficiencies of the enterprises, it decided to privatise some of its businesses.
NISUCO, which was already being mismanaged, was one of those businesses privatised in order to restore efficiency and productivity to the sector.
In 2006, the Josepdam Group paid $49m to acquire NISUCO, and its name was changed to Josepdam Sugar Company.
A representative of the workers in the sugar company, Joseph Asasile, who had been working in NISUCO for about 32 years, recalled that NISUCO used to enjoy the Federal Government’s attention.
He said, “That time, Bacita was a small London. Before it was handed over to an individual, I had worked for two years as a seasonal employee and another 17 years as a permanent worker.”
According to him, investors used to bring brown sugar from abroad to refine at NISUCO and get good quality.
Presently, he added, assets worth billions of naira which were brought in by the Africa Development Bank during the time of former military President Ibrahim Babangida, were still intact.
“They used to employ us first as seasonal staff before becoming permanent staff. We totally went into privatisation in 2006 and they changed the name to Josepdam Sugar Company,” he said.
He lamented that when NISUCO was sold out to a private individual, the owner of the company died untimely.
“The woman used to fly to this sugar estate in a private jet. She was ready to bring this company back but had a plane crash in 2008 and died somewhere in Ogbomoso. She died with the pilot,” he said.
According to him, production in the sugar estate has stopped since 2011.
Because sugarcane was no longer grown on the vast expanse of land which was left idle for so long, he added, residents of Bacita took over the land and turned it to rice plantations.
He said, “Some people who are residents of this area plant rice. When sugar business stopped, those people started using the place for planting rice.”
While taking a drive around the estate with some of the workers, they showed our correspondent many of the recreational centres and staff quarters that were built years back but had become dilapidated.
The senior staff had their quarters while the junior workers also had theirs too in the sugar estate.
Most of the houses were currently being inhabited either by former employees of NISUCO or Josepdam, or some other private individuals as no one was taking care of the houses again.
Asasile said, “We had staff quarters for senior staff different from the junior staff quarters; the houses were built for different levels. Some of the staff in the quarters are still staying there farming as they have nowhere to go. Some of the houses are empty.
“We still have five management staff left in this company. I am the workers’ representative.”
Before, he said, the company employed thousands of workers but only 105 workers remained.
“We last earned salary over three and a half years ago. We all work like security. After security personnel in each department, the highest number of personnel you see in any department will be five,” he said.
He said many workers had died of hardship as the workers could not afford to eat good food and cater to their healthcare needs due to non-payment of their salaries.
“In the last three years, the record I have is that we have lost 28 of our staff members to poverty,” Asasile said.
He said the workers’ union had approached all necessary authorities to come to their aid but they had not received any help.
“Two of my children have stopped going to school; it is painful,” he said.
The remaining workers, he said, had continued to come to work even though sugar or sugarcane was no longer produced, adding that they needed to protect the assets in the factory worth trillions of naira.
“This place is still neat. We are cleaning it because we care,” he said.
Asasile noted that because the assets in the company were very valuable, thieves had continued to attempt to enter to steal some of them.
“This morning, we still caught a thief who tried to enter this place. We are taking care of the property. The person was arrested around 2am and had been handed over to the police,” he said.
Lamenting the state of the company, he said the buyer of the company had taken a bank loan to buy the sugar company but could not pay back due to the unfortunate incident of death.
This led the Asset Management Corporation of Nigeria to take over the place.
AMCON
AMCON was established by the Federal Government and saddled with the responsibility of recovering the non-performing loans hitherto disbursed by banks to their customers.
In 2016, AMCON took over the control of Josepdam Sugar Company, as the owner could not repay its outstanding debts. It appointed Mr A. B. Sulu-Gambari as the receiver for the sugar company.
The corporation announced that it planned to resuscitate the company by partnering investors for a “value-enhanced exit” within a reasonable period of time.
One of the managers left in the country, who spoke with our correspondent, said the Bacita sugar firm was sold to Josepdam Group of Companies led by Mrs Kuteyi.
“We still have our workers who are trying their best to look after what we have but there has not been any activity since 2011,” he said.
According to him, Josepdam Group borrowed money from the bank to buy the place.
“When they could not pay on the death of Kuteyi, the bank she collected the money from had folded up, AMCON took over the asset,” he said.
The manager noted that this made them to go to court because of the loan.
He said, “AMCON now appointed a liquidator, a receiver, to take over since 2016. That is how the company has been hanging around.
“The court asked them to settle out of court. I learnt they are making progress in resolving the issue. Until they resolve the issue, AMCON cannot do anything; Josepdam has not been able to do anything either. So, they have abandoned their workers.”
According to him, the facilities at the sugar facility are still working because many of them were brought in newly before the company became moribund.
Recently, AMCON auctioned the company to interested investors.
The corporation stated in an advert it placed in a national newspaper that interested investors should submit their bids alongside 10 per cent of the bid amount in a certified bank draft.
It stated that the successful bidder would be required to pay 40 per cent of the outstanding balance of the bid price within 30 calendar days of notification.
The receiver appointed for the bid was A.B. Sulu-Gambari & Co.
According to the advert, the sugar company comprises “thousands of hectares of arable land, sugarcane plantation, factory buildings and equipment, vehicles, office complex and staff/living quarters.”
It is hoped that things would turn around for the sugar firm if the right investors eventually take over the place.
Assets
According to those left in the place, the estate is worth billions of naira.
The sugar company has several hundreds of farm vehicles and equipment outside the factory left unused for years.
A member of staff said that before the company started deteriorating, the ADB brought some equipment to augment those in the place in the 1980s.
“Some are still working well; some need new engines; some need new tyres. The facilities are in good condition, but it is a sorry site because they are all idle,” the worker said.
He explained the relevance of some of the equipment on the ground, thus, “These are the cane ditchers used for digging canal; these are cane harvesters that cut canes.”
According to him, the cane loader has fingers which it uses to load canes from the farms and upload to the carts.
“These are also harvesters that can harvest other types of crops such as rice and maize, when you set them for specific purposes,” he added.
He explained the functions of the irrigation pumps, caterpillars, and seed planters, among others.
The recreational centres, he added, would make the estate an exciting place if they were renovated.
Factories
Another worker recalled the beautiful old times when the factory functioned with full capacity and produced sweet sugar.
He explained the sugar process method from the weighing stage to the juice extraction stage from the cane.
He spoke about the clarification of the juice, the heating and evaporation stage, the crystallisation and centrifugation, and the drying and packaging stage.
While explaining how the millers could extract the juice to how the brown sugar and white sugar were obtained, he said, “When they bring the cane, it passes through the route called derrick for unloading the cane to the shredder. From there, it sheds the canes into pieces.”
After the shredding of the cane, he said the raw juice would be purified, and evaporation conducted in different stages.
“By the time the cane had passed through the processes, there would be no more juice. After the first stage, we obtain diluted juice, and it is pumped into the processors.”
Power
While there had been epileptic power supply in the country for many years, the sugar company never suffered such misfortune in its glorious years.
According to one of the workers, the powerhouse generated its own electricity for operation on a regular basis.
The workers are unhappy that the powerhouse is now left idle now.
Taking our correspondent on an inspection of the powerhouse, Asasile said, “The idea of this place is to generate electricity. When we were in operation, we never used the national grid.
“The power we generated from here was sufficient to power our operations. The generator is steam-driven and generated electricity. The electricity from the national grid was not always constant.”
He explained the capacity of each of the power plants available.
“This one generated 2,000 kilowatts of electricity. This other one generated 1,000 kilowatts. We had plans to install another one that could generate 4,000 kilowatts, which would be able to power the whole of Bacita. It is already on the ground to be installed,” he said.
Way forward
The Nigerian sugar industry, which was first established in the 1960s, has not performed optimally in spite of the country’s comparative and competitive advantage in sugar production.
Some of the major setbacks suffered in the sector are the loss of hundreds of thousands of employment opportunities and a drop in foreign earnings.
In 2008, the NSDC came up with a national sugar master plan that estimated that Nigeria’s demand for sugar would reach the 1.7 million metric tonnes mark by 2020.
“To be able to satisfy this from domestic production, we will need to establish some 28 sugar factories of varying capacities and bring about 250,000 hectares of land into sugarcane cultivation, over the next 10 years. The bulk of the investment capital will come from private investors,” the NSDC stated.
The council noted that the goal of the NSMP was to make the country self-sufficient in sugar production by bridging the sugar demand deficit of 1.1 million metric tonnes worth N85bn as a result of unbridled importation and create a huge number of job opportunities.
The hope is high that the initiatives introduced would lead to the creation of 37,378 permanent and 79,803 casual jobs by 2020.
The Executive Secretary, NSDC, Dr Latif Busari, said the nation lacked adequate local skilled manpower required to occupy positions specifically meant for Nigerians across sugar companies in the country.
Busari said, “Foreigners are taking over job opportunities meant for Nigerians. We must do something urgent to halt this trend. Nigerians are daily being thrown into the labour market since positions meant for them are now being occupied by skilled expatriates.”
He regretted that more Nigerians were being thrown into the labour market, adding that the challenge needed to be addressed urgently.
Source: Punch
