Zambia’s largest sugar producer, Zambia Sugar, commissioned its more than $80-million product alignment and refinery (PAAR) project at its Mazabuka-based Nakambala factory earlier this month, which majority shareholder Illovo Sugar described as a vote of confidence in the Zambian economy.
“This project consolidates Zambia Sugar’s position as Africa’s single biggest cane sugar producer and is an investment for the future, underlining the company’s strategy of focusing on growth within its domestic and regional markets and downstream opportunities to diversify our product mix,” Illovo Sugar group MD Gavin Dalgleish said.
The project scope included the construction of a modern, high-specification refinery and a range of smaller factory improvements, during which 1 200 t of structural steel was erected, 3 400 m3 of concrete was poured and 1.6 km of piles were installed.
As a result, Nakambala would more than double its yearly refined sugar production capacity to around 100000 t and increase yearly sugar production capacity from 420000 t to 450000 t.
The fully functional plant would also trigger increased cane revenues for the 150 Manyonyo and Maggobo smallholder cane growers, who would supply the additional cane required by the Nakambala factory.
“The PAAR project benefits these local communities in terms of both revenues derived from the supply of cane to the factory and, as part of a broader multiplier effect, brings employment opportunities for seasonal agricultural workers and other job creation prospects,” noted Zambia Sugar.
Local Jobs During the construction of the project, Zambia Sugar also provided local jobs, supported local businesses and provided the opportunity for some of its Zambian employees to further their skills in promotion-related openings.
Through the “cane to crystal” journey, Zambia Sugar continued to add value to the economy of Zambia by creating and sustaining employment opportunities, both directly and indirectly through downstream and upstream value chains. The company supported an estimated 3 390 people through the outgrowers programme, and indirect and induced employment opportunities of between 1 881 and 8 087 people in the value chain.
Zambia Sugar estimated that the total operation supported between 11 285 and 17 491 jobs for every direct employee of Zambia Sugar and its value chains provided business for cane growers, cane haulers and contractors, among many others.
Dalgleish said the investment took place at a time when the world economy had recorded significant reductions in growth. “This has impacted the Zambian economy and, consequently, the current economic environment is characterised by high interest rates and rising inflation. “We recognise [the Zambian] government’s efforts in attempting to manage the economic fundamentals and to stabilise the exchange rate.”
The $60-million syndicated financing agreement for the refinery project was sourced locally, with Barclays Bank and Stanbic Bank appointed as the mandated lead arrangers, while Citibank and the Zambia National Commercial Bank were incorporated as financing partners. The balance of funding was sourced from Zambia Sugar’s own available cash resources.
Dalgleish added that the key driver for the Nakambala investment was the strong historical and forecast domestic refined-sugar sales growth, which was primarily driven by demand from domestic and regional industrial manufacturers. The project enabled the alignment of Zambia Sugar’s manufacturing assets behind a new post-European Union export sales mix and higher food safety standards.
This strategy would ensure that both direct consumers and industrial customers of the Whitspoon range of branded products continue to receive the sugar and syrup products which they liked best at the exacting quality standards they demanded, concluded Dalgleish.