Tanzanian government seeks investor collaboration to manufacture industrial sugar locally

TANZANIA – The president of Tanzania has directed the county’s Ministry of Agriculture to sit down with investors and come up with an absolute plan on how they can locally manufacture industrial sugar to cut down billions spent on importation.

President Suluhu Hassan said, As the government, we are willing to change the policy as long as it will help members of the business community to conduct their business with ease.”

She said when she laid the foundation stone for the expansion of the factory at Kilombero Sugar Company Limited (KSCL).

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.

The sugar industry has been a source of national debate in Tanzania especially with regular price rise.

The price hikes have been a source of blame game between the industry players and the government leaving consumers to be taken advantage of.

According to Mr Mchechu, the government owns a 25 percent stake in KSCL, while Illovo Sugar Africa holds 75 percent.

With the factory expansion, he said, it 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.

 The money for the ongoing expansion project has been codenamed K4 and 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 Nifio, the country could still be safe in terms of sugar availability,” Mr. Mchechu underscored.

Upon completion of the factory, its capital is expected to increase to Tsh 1 trillion (US$370m), with the government owning more than Tsh250 billion.

That is not all, next year, the government also plans to begin construction of a factory that will produce spirits and will hold a 25 percent share in this new venture as well.

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