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Sugar the New Oil?


 sugar

In 1989, I stumbled upon a study on sugar. It was stated then that, in 1986, France produced a ton of sugar at a cost of $700 but was selling same to African countrres at half the cost price. The question was how could France sell sugar at half its production cost per ton? In that study, it was revealed that the actual objective of setting up sugar factories in the advanced economies was not primarily to produce sugar. It was revealed that the by-products of sugar cane after extracting sugar molasses, filter-cakes and bargess are in turn raw materials for 18 different strategic industries such as industrial yeast, industrial alcohol, shoe polish, ceiling boards, glass lamination etc and these subsidiary industries were the actual reasons for setting up the sugar factories.

Thus, instead of the advanced economies allowing African countries to intensify domestic production and achieve multiplier effects, they sold sugar to our countries at rock bottom prices to discourage our nations from producing. They know the potentials of sugar are almost equivalent to oil in any serious economy. As at that year, 1989, Nigeria was producing only 4% of her consumption rate. In spite of the setting up of the Nigeria Sugar Development Council by the Abacha administration, little improvement was done. Instead, the richest Nigerian entrepreneur today, Dangote, owes his rise to the billionaire club largely on sugar importation at the initial stage.

Despite the global turbulence in commodity prices in the last 12 months, there has been one surprise star performer – sugar. Prices have risen 86% this year to reach a 28-year high at the end of August. Prices have, in fact, more than doubled since January 2008. With the market as a whole facing an estimated deficit of 7.8m tons this year – equivalent to 3.8% of global output – it is understandable that prices have risen. Many factors contribute to this. In Brazil, the world’s largest producer, there was too much rain, and the cold weather has not helped either.

Indian production fell from 28.6m tons to 16m tons due to a poor monsoon season, and restricted growth in planting due to weak prices last year. In 2008, India’s population consumed around 15% of global production. Indian production is not expected to meet demand before 2011 and problems in Pakistan, Russia and Thailand – not to mention the effects of a possible EI Nino – explain the steep rise in prices.

African producers, accounting for 6.4% of global production, and who among them have probably greater capacity than other current large producers to expand their output, may well be set to benefit from the high prices. Africa already does rather well with its sugar trading accounting for 7% of global exports. Its share of global consumption has swollen from 3.9% in 2000 to 4.9% in 2007. This share is likely to continue growing.

As a country’s income grows, there is a tendency for its sugar consumption to grow too, although this tends to plateau at around 35kg per capita year amongst middle-income countries. India’s rapidly growing appetite for sugar has meant that the country is now the world’s largest consumer of sugar, although Brazil remains the world’s greatest per capita consumer. Only Gambia (53.8kg) and Swaziland (97.4kg) consume more than this in Sub-Sahara Africa. Countries with per capita consumption substantially below the global average are likely to see that consumption rise.

Sugar still remains a cheap source of calories for consumers, so demand is likely to remain resilient globally, if static in the face of downturn and high prices. In Africa, consumption of sugar is expected to rise. The increasing significance of sugar as a source of ethanol for fuel is also driving demand. Brazil has had enormous success with this fuel source, a policy it pursued to improve energy security in response to the 1970s’ oil shock.

Other nations are also following suit. President Omar Hassan AI-Bashir has just opened Africa’s first sugar-to-ethanol plant in Sudan, utilizing sugar from one of Africa’s biggest sugar plants in Kenana. The plant was built with Kuwati support. Nigeria is also looking to emulate the Brazilian bio-fuel model, following a memorandum of understanding between the two countries in 2005 and the recent visit of President Yar’Adua to Brazil a few weeks ago.

With 30m/tons per hectare yields the global average, Nigerian 15m/tons per hectare yields have plenty rooms for improvement. Nigeria has 400,000 hectares of land suitable for high-yield sugar-cane production and the country is seeking to increase its production of sugarcane. Feasibility studies are looking along the course of rivers Niger and Benue. Some of the new production is scheduled for bio-fuels. Sugar production potentials is unlimited in the country. Recently, Nigeria’s biggest sugar refiner, Dangote Sugar, announced profits of N21.87bn ($149m) – up 2% on last year. The company is the major supplier of sugar to the nation’s beverage manufacturers. Indeed, the next major growth sub-sector in the economy may be sugar

Written by Abba Mahmood

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Investing in SANDPAPER Manufacturing


Article written by Leo Okoro

Background
PRESIDENT J. F. Kennedy of the United States of America (USA) at Nigeria’s independence in 1960, referring to Nigeria, said “a new nation is born in Africa that has the resources and power to rise to our USA level in 15 to 20 years.” He added: “Let’s give them a unique birthday gift.”

That Nigeria is the giant of Africa cannot be overemphasized. The country is making all preparations towards becoming one of the top twenty economies of the world by the year 2020. Africa has always looked on Nigeria to establish an industrial base founded on establishment of micro, small and medium scale enterprises of which sand paper-manufacturing industry is one.

The springing up of such industries will go a long way in eradicating poverty, unemployment, hunger, youth restiveness, terrorism and other social vices. Even development, peace and progress will be engendered in the country.

sanpaper
Sandpaper is a strong paper coated with sharp sand or similar substances used for rubbing rough surfaces smooth. Standard sandpaper has measurement of about 30cm x 21cm. Sandpaper is of different forms, the smooth and rough sandpaper. The rough sandpaper is used to smooth very rough surfaces while the smooth sandpaper is used on mildly rough surface to make it smooth. Sandpaper is an imported product in Nigeria. Statistics show that almost 100 per cent of sandpaper used in Nigeria is imported, as there are no well-known local manufacturers of the product in Nigeria.

The project
The project is setting up a production plant to manufacture sandpaper. The plant will be capable of producing 405,000 sheets of sandpaper per annum at production rate of 1,500 sheets per day, employing 8 members of staff at the on set working for 270 days per annum. The raw materials needed for this project are sharp sand, broken bottles, sharp stone, paper and gum. These raw materials are easily sourced locally in Nigeria.

Machinery
The machines required are Samola sandpaper machine and the drying oven system. The Samola machine comprises of 10HP electric motor, 3HP roller electric motor, dual pulley, hammer pulley, dead rolls spreader, twin roller system, paper roller desk, and adhesive molder. The oven system is for drying of the product and it is powered by gas. The machines can be locally fabricated. Imported (foreign) machines are also available at higher prices.

Production process
The production process is very simple. The sharp sand, stone and broken bottles chips are mixed up in the right proportion and fed into the hammer mill. The hammer mill reduces them to the required sizes and screens the materials into granules. The paper is passed through a gum bath and the gritty granules are made to come into contact with the gum surface of the paper using the spreader. The dead rolls spreader spreads and presses the granules unto the gummed paper. The paper with the gum and the granules is passed to the oven system for drying. After drying, the sandpaper so produced is packaged ready for sale.

Uses/market
Virtually, all sandpapers used in Nigeria are imported from China, Taiwan and Europe as there are no well-known local productions. The lack of local production has created a wide supply-demand gap, as demand far outstrips supply, and the available products sold at high prices. There is large market for the product in Nigeria as the demand for the product is ever on the increase in industries like building construction, metal/steel, furniture/woodworks, electrical/mechanical, shoe industries, etc.

Profitability
The plant producing at annual installed capacity of 405,000 sheets of sandpaper of 30cm x 21cm per sheet, selling at an average prices of N150 per sheet is capable of generating a net turnover of N60.8 million per annum. A net profit of N5.5 million in the first year of operation is realistic with an anticipated annual growth rate of 15 per cent. The pay-back period is about three years.

Funding
Finance for this project can be through equity contribution of the promoters, commercial and micro-finance banks. Other specialized banks like the Bank of Industry (BOI) are handy to augment financing of this project.

Implementation
Implementing this project begins with conducting a detailed feasibility study and producing a report that ascertains the actual cost/benefit scenario of the project.

Recommendation
The writer strongly recommends this project to all interested investors as the industry is very virgin, attractive, feasible and quite lucrative. All prospective investors can contact the writer for a bankable feasibility report and further assistance.

Investment requirement

Preliminary expenses                          100,000
Factory site                                              400,000
Plant and machinery                        1,500,000
Motor vehicles                                    1,500,000
Furniture/fitting and equipment    300,000
Working capital                                      300,000
Contingency                                             100,000
Total                                                   4,200,000

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THE WORLDS SAFEST ECONOMY?


Written by Henry Kester Ewruje

The world is going through a global economic crisis but African countries have remained relatively unaffected by the first round of the crises.
In a write-up for Gateway Nigeria, Naija4ever, started that “Nigeria’s economy grew by 5% last year despite the Niger Delta crisis and the epileptic power supply. Why am I not surprised?
With this kind of economic growth, I cannot but agree that the attainment of vision 2020 by the federal government is possible, when the country hopes to become one of 20 top economies in the world.
The Central Bank of Nigeria gave the nations economy a clean bill of health with the domestic macroeconomic environment remaining resilient in 2008 despite continuing global economic melt down.
Financial experts say the economy is likely to remain insulated from the adverse effects of global financial crises because of limited exposure of our financial institutions to the global financial markets and the underlying cause of the crises.
Many things have been said and written about the country’s hyra-headed multifariously stunted economy. The economy is no doubt in dire straights.
Some aspects of the economy need urgent attention such as electricity, high prices of petroleum products, health care, food crises, insecurity, education, infrastructure, agriculture, Niger-Delta and employment.
Competence and confidence are fast losing ground in the country and in our people.
Surprisingly, economic and financial experts say the nation is a safe haven for investment.
Since Obasanjo’s tenure as president the only areas where growth were recorded were in the banking and telecommunications sector, but there are reports of likely explosion in other areas of the economy.
As much as we want to before optimistic about Nigeria, we are struck in the face by some brazen realities that it will be foolish to live in a false sense of grandeur. What business can anyone do with less than one hour of electricity a day? Anyway, there are those who can afford diesel for their generators.
Life however, becomes meaningless when the people abandon hope. Only emergency actions can ameliorate the extensive damage done to the psyche of Nigerians and the structure of the economy. The country’s natural and human resources have not been properly husbanded and deployed since independence in 1960.
Nigeria has come out tops in global surveys carried out on every negative indicator-poverty, human rights violation, life expectancy, transparency, government, science and technology, HIV/AIDS. Literacy, health, unemployment, violence and corruption.
Many people are thinking that the country would soon collapse.
Surprisingly, the highly credible Merrill lynch came out in November last year, with an economic survey, and the result is that Nigeria is the world’s safest economy, meaning the least vulnerable economic environment.

By this pronouncement, Nigeria may attract huge attention and investments. This is at a time when the USA, leads other countries in the risk zone including the UK, Euro zone, Bulgaria, Sweden, Hungary, Romania, South Korea, Switzerland and Australia.
Merrill Lynch came out in the economic survey that Nigeria, including Mexico, Philippines, Columbia, Egypt, Oman, Indonesia, Peru, China and Russia.
Merrill Lynch and Co, Inc is global financial services firm. Through its subsidiaries and affiliates, the company provides capital market services, investment banking and advisory services, wealth management, asset management, insurance, banking, and related financial service worldwide.
Merrill Lynch has its headquarter in New York City, and occupies the 34 stories of the Four World Financial Centre building in Manhattan. It survives on future studies and forecasts, and does not joke about it.
Nigeria should attract huge attention and investments. It is time for Nigerians abroad to come back home, and invest in the economy.

Nigeria is ripe for investment.

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Finance


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Nigeria’s reputation can blind businesses to its potential


It all boils down to perception versus reality. When many business people think of Nigeria, they immediately think poor infrastructure, limited power, security and crime issues. However, the reality is very different. British companies with a pioneering spirit are doing well. For them, Nigeria is one of Africa’s best-kept secrets and they want to keep it that way.

My job out here is to spread the message to UK companies that Nigeria is a very lucrative market for those prepared to take on a challenge.

The most populous country in Africa, with a population of 149m, Nigeria is tipped to become the world’s sixth largest country by 2050, with 289m people. Lagos alone has a population of 15m and is growing 10 times faster than New York and Los Angeles. And Lagos currently contributes 32pc of Nigeria’s GDP. It will be hard to ignore.

The opportunities for British business extend well beyond oil and gas to infrastructure, ICT, healthcare, agriculture and financial services.

This week I met a guy from a British company which has decided to set up in Nigeria. It is small and provides niche training, but is already working with one of the oil majors. He was amazed to hear of the opportunities on offer and we are now working together to try to open a few more doors.

Having been here for a few months, I can say there is nothing more rewarding than exploring new opportunities for UK companies and then helping make them happen.

Andy Davison is the deputy director from UKTI in Lagos

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Investments


Central Bank
That Nigeria is the giant of Africa can not be overemphasized. PRESIDENT J. F. Kennedy of the United States of America (USA) at Nigeria’s independence in 1960, referring to Nigeria, said “a new nation is born in Africa that has the resources and power to rise to our USA level in 15 to 20 years.” He added: “Let’s give them a unique birthday gift.” The country is making all preparations towards becoming one of the top twenty economies of the world by the year 2020. Africa has always looked on Nigeria to establish an industrial base founded on micro, small and medium scale enterprises.

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