I have boldened for you the relevant part in case you still ponder the question i raised. AIX M4 is not GNU M4 and perhaps GNU M4 has features the AIX M4 lacks and M4sugar relies upon those. Setting environment variables will not change the features a certain version of M4 has or has not.
Sorry, but i think you are mistaken: if you have installed GNU M4 it should reside somewhere in /usr/local/bin and definitely not in /usr/bin. In /usr/bin reside the original OS binaries and nothing else. By letting the M4 variable point to /usr/bin/m4 you probably overrode any possiblity left that the make-utility might find it.
1) check your path: perhaps your PATH variable looks like "/usr/bin:.....:/usr/local/bin:.....", which means that - first come first serve - if a command resides in /usr/bin AND in /usr/local/bin the one in /usr/bin (the original OS binaries) will be taken until explicitly stated otherwise. To use the one in /usr/local/bin either change your path (not advisable) or specify /usr/local/bin/command explicitly.
2) set your M4 variable to where the GNU M4 resides, not where ANY M4 is.