The Bitter Sugar War between Dangote and BUA

The latest clash between two of Nigeria’s richest men, Aliko Dangote and Abdul Samad Rabiu, is over sugar. It is a dispute over who controls the sugar market in Africa’s biggest economy, Premium Times reports.

While Mr Dangote accuses his competitor of attempting to appropriate undue advantage according to the report, Mr Rabiu says Mr Dangote, Africa’s richest man, wants to monopolise the market and manipulate prices. Mr Dangote denied the price-fixing allegation in a statement Friday.

But documents obtained by PREMIUM TIMES shed light on the accusations and counter-accusations by the two sides, and the government’s role in the feud.

In the story, Dangote Sugar Plc, supported by Flour Mills of Nigeria Plc, accused rival BUA International Limited of skirting the backward integration policy of industry of the National Sugar Development Council (NSDC) by setting up a sugar refinery in Port Harcourt.

Premium Times submits that backward integration is a business model in which a firm expands into its supply chain rather than buy raw materials elsewhere. As an example, instead of buying maize from external suppliers like farmers, a company producing infant food may choose to invest and own maize farms and supply itself. This often helps in reducing cost. There is also forward integration, in which a company buys its own products for other purposes.

In the sugar context, as the story continues, the Nigerian government through the regulator, NSDC, has mandated sugar companies to not just build refineries and process imported sugar extract, but invest in developing the supply side — namely, sugar cane plantations. This is expected to reduce Nigeria’s import-dependence, stimulate the economy, create jobs and support the Naira.

While that is being developed to meet the country’s demand volume, according to the report, the NSDC allocates quotas of sugar extract firms can bring into the country based on its backward integration investment size.

Dangote Sugar Plc, supported by Flour Mills of Nigeria Plc, two of Nigeria largest sugar makers, argues that BUA has not met the backward integration requirement of the government to set up a new refinery, which they believe would confer an advantage on the firm.