The President of Zambia, Mr Edgar Chagwa Lungu, has recently inaugurated a new fully-functional sugar plant that more than doubles the country’s sugar production capacity.
Thanks to this new plant, Zambia’s annual sugar production capacity was expanded to 450,000 mt.
The plant also counts with a high-specification refinery that expanded the refined sugar production capacity to 100,000 metric tonnes (mt) per year.
The factory, located in Mazabuka in the Southern Province of Zambia, was built by Zambia Sugar Plc (LUSE:ZSUG) at a total investment of USD80m.
It is part of the Product Alignment and Refinery Project (PAAR) launched by President Lungu in 2015 to expand the sugar production capacity of Zambia.
Zambia Sugar Plc financed the project with USD20m in cash while Citibank and the Zambia National Commercial Bank lent the remaining USD60m.
Domestic and foreign sugar demand from Southern Africa has been increasing in Zambia in the last two years.
Therefore, the PAAR project was needed to be in line with this growing market, explained Zambia Sugar Head of Corporate Affairs and Communication Japhet Banda.
Good partnership with customers in Southern Africa have been achieved despite the current economic challenges and the new factory will help to boost revenues from the growing demand, added Zambia Sugar Managing Director Rabecca Katowa.
Economic challenges such as currency depreciation and power outages affected Zambia Sugar’s production in 2015, which didn’t start at the beginning of April as scheduled.
However, at the end of that month production could be resumed and revenues increased to ZMW1,067m in the six months ending in September 2015 up from ZMW965m in the same period in 2014.
The company expects domestic and regional demand to remain favourable towards the end of the year to support sales.
It would overshadow demand from USA and Europe that is expected to fall due to the current surplus of sugar stocks that will affect exports and reduce it below 2014 levels of 1,284,174 mt.
The Zambian sugar sector accounts for almost 4% of the country’s GDP and 6% of total exports generating approximately USD45m in revenues per annum in the last five years.
Southern African demand account for approximately 60% of the total imports by the African continent estimated at USD6.31b in 2013 and representing 19% of global imports according to the Massachusetts Institute of Technology (MIT).