How government’s laxity is killing Kenya’s sugar subsector

Illegal imports killing Kenya’s sugar subsector

Sugar industry stakeholders are decrying government laxity in cracking down on illegal sugar importation in the country.

According to the Kenya Association of Manufacturers (KMA), excessive importation of sugar from COMESA countries is the biggest challenge to the growth of local sugar production.

KMA’s sugar sub-sector strategic plan notes that the country heavily imports sugar from Uganda thus flooding the sugar market and dampening local sugar prices not only affecting price and demand but subsequently the local sugar farmer.

On top of excessive importation of sugar, the sub-sector suffers from the smuggling of sugar into the country as a sizable amount of unaccustomed sugar is smuggled in through porous borders. Weak regulatory framework and corrupt boarder officials.

“Limited research and development, excess sugar importation, weak regulatory mechanisms and sugar dumping hinder the industry’s effectiveness as an economic and social catalyst. Consequently, this has led to inadequate total production, and eventually difficulties in meeting market demand. It is therefore critical that we turn around the sugar industry, to make it competitive – locally, regionally and internationally,” says KAM Chair Mucai Kunyiha. 

Further, sugar cane farmers keep counting their losses due to poor infrastructure. According to the strategic plan, many sugar cane access roads are impassable especially during the rainy seasons resulting to high turnaround time and product loss during transit.

Importation of sugar

In recent years, according to a report by the World Bank, sugar production has declined from about 635,700 tons in 2015 to 491,100 tons in 2018 of milled sugar. Meanwhile, sugar imports have been increasing. The annual domestic demand is over 900,000 tons, meaning the country is a net importer of sugar. Even then, Kenya exports small quantities of sugar mostly to South Sudan and Somalia.

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Kenya has been importing 350,000 tons from within the EAC and COMESA due to an increasingly widened deficit in the local market.

Ugandan sugar account for 43 per cent of the total imports by Kenya from the COMESA. Kenya will this year import 90,000 tons of sugar from Uganda and the remaining 160,000 tons from other countries after exhausting its COMESA import quota for 2020.

Further, Kenya does not produce refined sugar, and all its sugar for the industrial food and beverages sector is imported. Key non-COMESA countries that are top exporters of sugar to Kenya include: Brazil, Thailand, India, and Mauritius. Egypt, on the other hand, is the main import source within the COMESA region.

Sugar imports from non-COMESA and East African Community (EAC) countries are assessed at ten percent duty if imported under the Tax Remission for Exports Office.

Saving sugar subsector

Speaking during the launch, Ministry of Industrialization, Trade and Enterprise Development Chief Administrative Secretary Dr. Lawrence Karanja, noted that Government remains committed to reviving the sugar industry. 

“We reaffirm our commitment to developing solutions, to enhance the Kenyan Sugar Industry’s competitiveness. Remedying these solutions requires a multi-sectoral approach. We are currently implementing the findings of the Sugar Taskforce report, as part of combined efforts to revive the sugar sector,” explained Dr Karanja. 

As such, the strategic plan recommends an effective regulatory framework for coordinating sugar importation and exportation to ensure the forces of demand and supply are balanced. Further, the plan proposes stringent enforcement of 100 percent duty for sugar from other world markets save for COMESA and EAC regions.

Moreover, stakeholders are calling on the government to enhance interagency surveillance to curb sugar smuggling within its borders. Equally with devolution taking shape, the document says both the national and county government must take up their respective responsibilities in infrastructure development and maintenance in sugar belt regions.

KAM Sugar Sub-Sector Chair, Joyce Opondo, shared the KAM Sugar Sub-Sector’s vision. 

“The KAM Sugar Sub-Sector Strategic Plan aims to guide the sugar industry to reposition itself competitively, foster the adoption of policies, and innovations that will result in efficient and effective sugar industry and improve the connection between national policy priorities and sector-level actions. We are optimistic that the plan will help unlock the potential of the sugar industry and the players along the value chain,” said Opondo

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