• +251115526653
  • info@etsugar.com
  • Phillips Building, Chad St, Addis Ababa, Ethiopia

Ethiopian Sugar Industry Profile

It was at Wonji in 1951 some 110 km east of the capital Addis Ababa that modern sugar industry started in Ethiopia as a share company established by foreign private investors & Ethiopian government. By then the Netherland’s H.V.A. Company had entered into the sector as a foreign share holder. When the factory started production in 1954 its initial production was 140 tons of sugar a day. At the start, the share company had five thousand hectares of land for its sugarcane cultivation.  As its location is one of the most suitable areas of the world to the sector it opened a door to Wonji Candy Factory to come forward.

Then, followed Shoa Sugar Factory in 1962 with 170 tons of sugar production capacity a day. The two factories known by the name Wonji and Shoa Sugar Factories /which later on administered as one factory/ altogether had the capacity of producing 75,000 tons of sugar per annum till 2012 i.e. prior to the completion of the new Wonji Shoa Sugar Factory. Serving for more than half a century and getting obsolete, these two Wonji and Shoa sugar factories were closed in 2012 and 2013 respectively. Replacing these pioneer factories, the new and modern factory started production in 2014.

The second factory, Metehara Sugar Factory is established as a share company between same Netherlands Company and the then Ethiopian government in 1965 and started production in 1969 at a location known as Merti some 200 km from Addis Ababa. Currently, the factory with a total 10,235 hectares of sugarcane cultivation land has a capacity of producing more than 130 thousand tons sugar and 12.5 million liters ethanol a year on average.

Five years after the establishment of Metehara Sugar Factory i.e. in 1974 following the dawn fall of the emperor’s regime all sugar factories were made to be administered under the ownership of the government according to legal notice number 58/1977 of the then Ministry of Industry and started operating under the then Ethiopian Sugar Corporation. The corporation had also been made to administer the Addis Ketema and Asmara Candy Factories together with the above mentioned three sugar factories.

Meanwhile, in relation with sugar development, Fincha valley is found to be suitable and sustainable for sugar development as per studies conducted in 1974. Based on this extensive study was carried out  in 1978 by the British Bookers Agricultural International Limited for the establishment of the country`s third sugar factory – Fincha Sugar Factory.

Construction of the factory which was delayed by finance shortage started in 1988 and cane planting in 1991. It was completed eight years later and inaugurated by the then FDRE president H.E Negaso Gidada (Ph.D) and began regular production in 1998.

The gap between the establishment and commencement of production of the factory is mainly occurred due to the political change the nation had undergone.

Its finance sources were African Development Bank and Development Fund; Governments of Australia and Spain as well as domestic banks of the nation.

Its initial sugar production was 50 thousand tons per annum. More modern than the former factories, the factory’s construction job including its ethanol plant was executed by American company known as F.C. Shefer and Associates and Netherland’s company called Dewetto International while many domestic construction companies had also played their part in the process.

Later in 1992 the Corporation which had administered the three sugar factories was dissolved by stature after 14 years of service. All the above factories were reestablished as separate public enterprises. Metehara and Wonji Shoa Sugar Factories by regulation number 88/1992 and 89/1992 respectively while Fincha Sugar Factory was established by regulation number 199/1994 and had become independent public enterprises.

Following this Ethiopian Sugar Industry Support Center came into existence in 1998 to provide support to the factories. The center was established as a share company of the Development Bank of Ethiopia, Ethiopian Insurance Corporation and the three sugar factories. Years later instead, Ethiopian Sugar Development Agency was established by proclamation number 504/2006. The Agency had given support to the factories in project development, research, training as well as marketing.

In 2006 Tendaho Sugar Factory was established by Regulation Number 122/2006 as a fourth project in the country. Completing the construction of the first phase of the factory with the capacity of crushing 13 thousand tons of sugarcane per day production was started in 2014. But, since 2018 the factory has stopped its operation due to recurring drought that stroke the area and hence deprived the cane cultivation land the factory has developed.  The factory was supposed to have sugarcane cultivation land on 25,000 hectares on its first phase.

Thereafter the then Sugar Corporation with a vision of executing sugar development activities at a large scale came into existence on October, 2010 by the Council of Ministers Regulation No.192/2010. It had been operating under supervision of a board of directors. The Corporation had been made accountable to the then “Public Enterprises’ Property and Administration Agency” as dictated on proclamation number 1097/2018. It was then in March 2022 with the decision of the FDRE Council of Ministers Regulation Number 500/2022 that Ethiopian Sugar Industry Group is established replacing Sugar Corporation.

Since 2010 the sugar development activities carried in large scale had been significantly benefitting communities around project areas as well as citizens of the nation in various ways. It made irrigation, potable water, roads, schools, health posts and other social service institutions available for the local community. The endeavor had also expanded the land covered with sugarcane, increased the number of sugar factories and created job opportunities to large numbers of citizens. 

Sugar Industry Sub Sector  

Sugar development sector is one among other huge projects which enables industry take a leading role in the nation’s economy. Ethiopia has huge human as well as natural resources which enable the nation to broaden this export oriented manufacturing industry sector and its productivity.

The nation has suitable climate, more than 1.4 Million hectares wide and proved irrigable agricultural land as well as abundant resource of water and ample labor resource. The government, since 2018 has given higher attention to the sector and is working for its further development so that adding value to the factories it could withdraw itself from the sector giving room to local as well foreign private investors. And, to fulfill the purpose Ministry of Finance is working closely to privatize much of them. 

Productivity

The country is rich with the aforementioned resources that it is possible to cultivate 162 tons of sugarcane per hectare on average in 15 months. In relation to the productivity it is possible in Ethiopia to produce 10.8 tons of sugarcane per month and when compared against the global sugarcane production potential it outstrips the global production per hectare in 2.3 tons.

Cognizant of this fact, the nation since 2010 started broadening the sugar development sector which had been limited to Wonji Shoa, Metehara and Fincha Sugar Factories for more than half a century to other parts of the country.

Accordingly, Tana Beles Sugar Development Project in Awi Zone of Amhara Region come up with a sugar factory with total 12 thousand tons cane crushing design capacity a day in June 2021 and begun trial production by same year using sugarcane planted on thirteen thousand hectares of land. The completion of the construction of the factory had been delayed for about eight years while it should have been finalized in 18 months period and it was with further injection of over 95 Million Dollar by the government that the construction was made completed and start trial production.

On the other hand, the nation has been working to have four sugar factories which will use sugarcane developed on 100 thousand hectares of land in  Southern Nations, Nationalities and Peoples Regional State and South Western Ethiopia Region where Omo Kuraz Sugar Development Project is located.

The constructions of these four factories are at different levels. Among these Omo Kuraz Sugar Factory Number Two and Three, with each having crushing capacity of 12 thousand tons of sugarcane a day, have started production in March 2017 and in October 2018 respectively.

Whereas the other two projects, Omo-Kuraz Sugar Factory One reaching 95%  and Five 25% of their factory construction works and each having crushing capacity of 12 thousand and 24 thousand tons of sugarcane a day respectively are awaiting the necessary capital from financial sources to be concluded and enter into their regular operation.

On the other hand, construction of Welkayit Sugar Development Project which will use sugarcane developed on 39 thousand 500 hectares of land as well as a factory which will have the capacity of crushing 24 thousand tons of sugarcane a day had been in advance until the law enforcement measure has started taking place following the peace crisis of the northern part of Ethiopia and hence terminated accordingly.

Commencing 10 huge sugar development projects at the same time which requires high investment and a large number of skilled manpower of the sector in the lowland areas of the country has been challenging as the selected areas for the purpose were located at remote areas where no infrastructure is available.

Though the successes registered so far are not as anticipated, it is possible to say that they foresee the bright future of the industry as core foundations like roads, dams, irrigation canals with various levels, irrigable cane plantation areas, housings of different purposes, electricity, telecommunications infrastructures, etc. are made available now laying the ground to exploit the nations’ potential.  Moreover, expansion projects had been carried on Wonji Shoa, Metehara and Fincha sugar factories.  The effort has thus enabled the country to increase its operational sugar factories from three to eight.

Accordingly, the following new sugar factories Kessem, Arjo Diddessa, Omo Kuraz Sugar Factory Two and Three as well as Tana Beles Sugar Factory have been made operational in years between 2015 and 2022.  Moreover, it has been possible to widen the land covered with sugarcane to 102 thousand 741 hectares from 30 thousand 397 hectares in 2009. This was made possible by the efforts made in the past eleven years. Similarly, the efforts made to increase irrigation infrastructure became fruitful both for the sector as well as the local community of the development area.

Community Services

  • Parallel with the sugar development and working with Ministry of Water, Irrigation and Energy it had been possible to build 255 social service institutions like schools, potable water supply centers, health institutions, mills and roads;
  • Members of the local community are given priorities to be hired at the projects after getting training on tractor operation, building, carpentry and on other relevant skills which will continue strengthened  in the future too;
  • The local youth are organized in micro and small enterprises to take part in the development activities and generate income of their own;
  • Irrigated land is given to the local pastoralist community that they have begun producing crops like maize while conditions are laid for them to be sugarcane out-growers latter. To realize this community members’ experience-sharing program were held through visiting sugar cane out growers of Wonji Shoa Sugar Factory;
  • About 1.2 billion birr has been spent from 2010 to July  2022  for the construction of social service institutions, infrastructure, compensation, vocational training and others to benefit the local community;
  • Ever since the development in the sector is started at a large scale in 2010 more than 450 thousand citizens have got jobs on permanent, temporary and contractual basis.

Domestic Sugar Supply

Even though the nation`s sugar industry has scored more than half a century, it has limitations in satisfying the domestic demand because of the following facts:

  • Growing demand of sugar of the society in relation to the fast economic development the country is registering;
  • Growth of population and
  • Due to increasing number of industries which use sugar as an input which all together have made the sugar demand and supply incompatible.

The current annual sugar supply is about 650 thousand to 700 thousand tons of sugar of these 325 thousand to 400 thousand tons of sugar is produced in the country.  To fill in this gap about 200 to 300 thousand tons of sugar is imported annually by the government spending high amount of foreign currency and thereby supply the market at a fair price. The current sugar consumption level per individual in Ethiopia is more than 10 kilograms a year though it was possible to supply only 7 kilograms.

As stated earlier the government spends higher foreign currency and distributes sugar at a fair price to fill in the gap between the demand and supply. As importing sugar is not a long-lasting solution, the sugar industry sub-sector has gained big attention from the government along with other manufacturing industry sectors.

Ethiopia has been extensively expanding sugar development projects since 2010 in lowland areas carrying out   “Sugar Revolution” so as to:-

  • Narrow the gap between demand and supply of sugar and hence eventually satisfy the demand with domestic production;
  • Improve the lives of citizens by creating vast job opportunities;
  • Ensure the benefits of citizens of the development areas and
  • Earn foreign currency by exporting the product.

To tap the potential the country is endowed with and hence attain the aforementioned goals, the Council of Ministers of the FDRE Government in its Proclamation Number 500/2022 has established Ethiopian Sugar Industry Group to administer projects and three Sugar Factories namely Arjo Didessa, Omo Kraz Two and Three Sugar Factories while making five sugar factories autonomous and these are Wonji Shoa, Metehara, Kessem, Fincha, and Tana Beles sugar factories.

1 thought on “Ethiopian Sugar Industry Profile

Leave a Reply

Your email address will not be published. Required fields are marked *