Tanzania now ponders local industrial sugar production

Dar es Salaam. Tanzania is looking up to the possibility of producing industrial sugar locally to save millions of dollars that the country currently spends on the importation of the product.

Currently, the country imports all of its 250,000 metric tonnes of its annual industrial sugar demand.

But speaking in Morogoro yesterday, President Samia Suluhu Hassan directed the minister for Agriculture, Mr Hussein Bashe and his Industry and Trade counterpart, Dr Selemani Jafo, to sit down with investors and see the possibility of having the product manufactured locally.

“As the government, we are willing to change the policy as long as it will help members of the business community to conduct their businesses with much ease,” President Hassan said when she laid the foundation stone for the expansion of the factory at Kilombero Sugar Company Limited (KSCL).

Read: Tanzania plans to double sugar production, eyes vast DRC market

Expansion of the factory, a subsidiary of South Africa’s Illovo Sugar, is expected to cost a total of Sh800 billion.

So far, out of the money, Sh470 billion has already been spent on the ongoing expansion of the factory, according to the Treasury Registrar, Mr Nehemiah Mchechu.

President Hassan said the expansion of the factory will increase production, save the foreign currency that’s spent on imports, and ensure that the country has enough sugar for domestic consumption.

She said during her tour of Morogoro Region, she also went to Mtibwa Sugar, where she was informed that the factory was also improving its infrastructure ahead of its planned expansion.

“At Mkulazi, I was also informed that they will start sugar cane production. The expansion of these factories gives us the certainty of sugar as an item in food security,” she said. She said the government recognises the importance of the sugar industry in Tanzania’s economy and that it [the government] wishes it [the industry] continued to do well.

The sugar industry has been a source of recurrent debates in Tanzania, especially when regular price increases force the government to intervene.

In January this year, for instance, a supply shortage saw prices rise from the then usual Sh2,600 and Sh3,000 per kilogramme to up to Sh10,000 in certain regions.

The rise resulted in a blame game between the government and sugar producers.

It also forces the government to amend the Sugar Industry Act to give the National Food Reserve Agency (NFRA) the exclusive mandate to import, store, and distribute sugar for domestic consumption.

Yesterday, President Hassan said to open the foreign markets to Tanzania’s producers, the government was undertaking several measures, including improving the railway network to link Tanzania to such markets as Burundi and the Democratic Republic of Congo (DRC).

The KSCL managing director, Mr Guy Williams, said the company was currently producing 50 megawatts of electricity for its operations and that it was requesting to sell part of it to Tanzania Electric Supply Company Limited (Tanesco).

“We have reached 83 percent of the project and we hope by June 2025 we will start the operations. Through this expansion, we will have surplus sugar,” he said.

And, according to Mr Mchechu, the government owns a 25 percent stake in KSCL, while Illovo Sugar Africa holds 75 percent. The factory expansion, he said, will increase production from the current 127,000 metric tonnes to 272,000 metric tonnes, contributing 50 percent of all sugar produced in the country.

Mr Mchechu said the money for the ongoing expansion project, which has been codenamed K4, was sourced through retained earnings, bank loans, and shareholders’ loans. “This project has great benefits. It will have the capacity of processing 420 tonnes of sugar per hour and this means that by December, all the sugar cane from farmers will have been processed. As such, even in times of El Niño, the country could still be safe in terms of sugar availability,” he said.

Mr Mchechu said that upon completion of the factory, its capital is expected to increase to Sh1 trillion, with the government owning more than Sh250 billion.

“Next year, we will also begin construction of a factory that will produce spirits and the government will hold a 25 percent share in this new venture as well,” he said.

The KSCL board chairman, Mr Ami Mpungwe, thanked the government for continuing to support the investors by initiating talks on how they can solve various challenges facing the sugar industry.

“Our goal is to ensure that sugar is available at all times with the right quality and affordable price for Tanzanians. We are grateful that our managing director recently met with the minister of industry and trade to discuss liquidity issues facing the company, and the talks have progressed well,” he said. In his remarks, Mr Bashe said the demand for sugar in the country currently stands at 650,000 tonnes. He said, however, that this year, actual production will reach between 520,000 and 550,000 metric tonnes.

He said through the project, the number of farmers will increase from 9,000 to 16,000 and the income will also reach Sh165 billion from Sh65 billion.

“I will meet with the sugar producers. We must protect the rights of the investor, the farmer, and the consumer. We will build a mechanism for discussion. I have received instructions, and I will work on them. By 2025, we will have 700,000 metric tonnes through various producers,” he said.