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| 60% of sugar that Zambia produces is consumed domestically |
The regional and international environment is conducive for
the Zambian sugar industry to exploit its potential. The growth of the global
population
coupled with increases in global income, has induced a rising demand
in the consumption of sugar. At the same time, there is growing industrial
demand for sugar in the production of ethanol.
Furthermore, the global sugar industry is governed by
preferential trade agreements which benefit sugar producing developing
countries in terms of access to regional and international markets. The ACP/EU
Sugar Protocol, the African Growth and Opportunity Act(AGOA); and the SADC
Sugar Cooperation Agreement are some of the trade agreements that Zambia’s
sugar sub-sector can take advantage of to access lucrative sugar price offers.
According to Ministry of Commerce, Trade and Industry
Permanent Secretary, Ms Kayula Siame, Zambia’s sugar sub-sector contributed
about 3% to the country’s Gross Domestic Product (GDP) and 6% to the total
national exports in 2016.
During a Sugar subsector stakeholder breakfast meeting that
was held at Radisson Blu, Mrs Siame reiterated government’s commitment to
facilitate the diversification of the economy and that the sugar sub-sector had
been recognized as one viable industry to catalyze the process.
“Government is facilitating the development of farm blocks
in all provinces of the country with a view to encourage value addition to
various agricultural products such as sugar cane. This creates an opportunity
to expand growing sugarcane to other parts of the country as well as setting up
manufacturing plants to other parts to process various sugar products,” Ms.
Siame said in a speech read on her behalf by Ms. Njaame Mwila, an Economist for
Industry Development Programmes under the Ministry of Commerce, Trade and
Industry.
While the potential of the sugar industry has been given due
recognition, there exist a number of significant challenges that need to be
addressed in order to enhance growth of the sub-sector.
To begin with, basic infrastructure is still lacking in many
areas where potential sugar companies can be viably established. Such
infrastructure includes roads, water and schools to name a few..
Zambia Sugar Acting Head of Corporate Affairs, Sally
Namutowe, said that it was taxing for the industry to thrive as business in a community
that was impoverished. As such, the company has been compelled to extend its
corporate responsibility to the development of infrastructure.
“We have a project called the Lubombo road project where we
have partnered with youths and women…We have trained 100 youths in cobblestone
technology – a technology that uses cobblestone for paving. These youths have
already started working on a stretch of 10km road,” Ms. Namutowe disclosed.
Zambia Sugar is considered the big brother of the country’s
sugar industry. The company has been in existence since the 1960s and has
gradually grown to be the largest sugar producer and is working with the
communities it is surrounded by, to help improve their living conditions.
“We have what is called - Creating Shared Value - this is a
model we have adopted which mimics a business enterprise model where we partner
with communities and identify projects that create a win-win and empower
communities so that they can then use those skills way after Zambia Sugar has
sort of weened them off such projects….We have empowered growers. They grow
their own cane, they are creating wealth, they are employing their own people,”
Ms. Namutowe added.
She also highlighted water and environmental challenges
which threaten to sustainable production of sugar. Zambia Sugar generates its
own electricity - about 40 megawatts - that they use for their manufacturing
and irrigation systems. She said the drought that had been experienced in the
Southern Province in the just ended rainy season had cause a strained on the
company’s irrigation and electricity supply.
For upcoming companies such as Mansa Sugar which is located
in Chembe district in Luapula, the challenges of insufficient infrastructure
and adverse environmental effects are combined with the issues of land title
and tenure.
Sugar production requires huge amounts of land. In rural
areas, most land is held under customary tenure and owning large amounts of it
would, in some cases, require the displacement of some local communities.
Customary land tenure also makes it hard to establish and enhance the growth of
small-scale farmer outgrowers.
Mansa Sugar Limited Head
of Projects, Bhupender Singh Rathore, bemoaned the fact that his company was
promised 10,000 hectares but currently has been given 5,000 hectares.
“The 5000 hectares that were given to us, we’ve already
developed it to the fullest…As of now we are in excess of 2000 hectares of
sugarcane ready and we’ve conducted a few trials on the plant and the plant is
ready for commissioning which we hope by end of this month we will start
operating it commercially before official opening happens sometime next month,”
Mr. Rathore said.
He also appealed to the government to increase incentives to
new investments that are investing heavily in priority sectors such as
agriculture and industry
“These projects are heavily capital intense and if they’re
not enough incentives…people might even go to other countries. We should focus
on keeping all the investments especially for this low-hanging fruit of sugar.
We should focus that the majority of the investment should come into Zambia,”
he said.
The Zambia Development Agency (ZDA) was represented by Jones
Zulu, who explained that the government supported a number of incentives for
the manufacturing industries both within and outside the ZDA Act. He said that
what were known as income tax holidays which were abolished in 2018, were now
replaced with what was called accelerated depreciation.
“A companies still enjoy 100% waivers on duty on equipment
but now we have what we are calling accelerated depreciation. What that means
is if a company is bringing in equipment, and they’ve got a license with the
ZDA,…at the point when [the company] is supposed to be paying [its] taxes
…government allows [the company] to reduce [its] taxable income by that amount
of depreciation,” Mr. Zulu said.
While this was previously permissible at 20% over a period
of 5 years, currently a company can now frontload all that in the first year. He,
further, encouraged the representatives from the different sugar companies to
acquaint themselves with other incentives that were outside the ZDA Act.
The sugar stakeholder meeting was being sponsored by
SOLIDARIDAD Zambia. SOLIDARIDAD is an international civil society organization
that aims at facilitating the development of socially responsible, ecologically
sound and profitable supply chains through solution-oriented interventions.
In the sugarcane industry, SOLIDARIDAD has been working in Africa
since 2009 primarily in Eswatini, Malawi, South Africa and now recently Zambia.
In the fore mentioned countries, the focus has been on livelihood improvement
and capacity development of small-scale sugarcane growers.
SOLIDARIDAD Sugarcane Project Coordinator, Humphrey Nxumalo,
explained that the organization intervened at producer and policy level to
support the efforts of small-scale sugarcane farmers.
“We develop innovative solutions, modern tools and policies
where applicable and; we do capacity development to facilitate safe assessment
among sugarcane farmers …We also support cooperation and dialogue among
industry players,” Mr. Nxumalo said.
The sugar subs-ector stakeholder meeting brought together
various sugar producing companies, policy makers and the media to discuss the
state of the sugar industry in Zambia and to propose recommendations that can
enhance the growth of the sub-sector.
NAIS.
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