Kenya gets two more years to import duty-free sugar outside Comesa
Kenya has been pushed to open its market to more sugar from the Common Market for Eastern and Southern Africa in exchange for an extension to 2019 for the importation of duty-free sugar from outside the 19-member bloc. PHOTO | FILE
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Kenya has been pushed to open its market to more sugar from the Common Market for Eastern and Southern Africa in exchange for an extension to 2019 for the importation of duty-free sugar from outside the 19-member bloc.
Comesa also required Kenya to expedite the privatisation of sugar factories among other measures that improve the industry’s competitiveness in order to end reliance on the Comesa safeguards. Kenya is now expected to give a scorecard on the status of its sugar industry at the end of the safeguard.
Kenya has so far enjoyed the protection for 14 years. The current extension would have expired in February 2017.
Kenya has been pushed to open its market to more sugar from the Common Market for Eastern and Southern Africa in exchange for an extension to 2019 for the importation of duty-free sugar from outside the 19-member bloc.
During the just concluded Comesa Summit in Antananarivo, Madagascar, members successfully negotiated for Kenya to allow more sugar to be imported from the region outside the country quotas during shortages. This quota allocation criteria was backdated to August 2016 giving Comesa members who produce sugar more unfettered access into the Kenyan market.
The Summit also required Kenya to expedite the privatisation of sugar factories among other measures that improve the industry’s competitiveness in order to end reliance on the Comesa safeguards. Kenya is now expected to give a scorecard on the status of its sugar industry at the end of the safeguard.
Kenya has so far enjoyed the protection for 14 years. The current extension would have expired in February 2017.
The Kenya delegation at the Summit made a case for the extension on the grounds of structural weaknesses that had caused persistent inability to compete on equal terms with peers in the region.
“Kenya has displayed goodwill in the operation of the safeguard, for instance by allowing importation of sugar from some member states in excess of the allocated quota,” Comesa spokesman Mwangi Gakunga said.
He said during the extension Nairobi was expected to provide more market access based on the deficit and quotas already set by the Council of Ministers.
Sugar is a sensitive commodity in Kenya, and in recent years it has triggered a war of words between citizens of the East African nation and sugar millers from the country’s neighbours especially Uganda, seeking to access the lucrative Kenyan market.
Other highlights of Comesa’s decision are that Kenya continuously updates member states on utilisation of the quota allocations, re-assigns unfulfilled quotas and, within six months, finalises of splitting the Harmonised System codes (HS Code) in order to allow imports from members who would not qualify under the strict rules of origin.
The Council asked member states to fully utilise their quotas and all reallocations be based on the desegregated code which would be reviewed after two years.
Kenya communicates quota reallocations to members through the Comesa Secretariat since it stopped using the tender system for importing sugar.
Kenya produces 520,000 tonnes of sugar against an annual consumption of 740,000 tonnes, leaving a gap of 220,000 tonnes which is filled through imports.
In July, Kenya sought to relax rules on sugar imports by increasing import quotas for both existing and new companies in a bid to avert shortages fuelled by persistence underperformance of its millers. Import quota for each company currently ranges from 500 tonnes to 1,000 tonnes of brown (table) sugar that is largely used for domestic consumption, while the import permit for these companies remain active for 45 days.
Kenya has the flexibility to import between 12,000 and 15,000 tonnes of sugar every month from Comesa and EAC states to bridge the widening sugar deficit.
Currently, Kenya has licensed about 66 private companies to import table sugar and 47 companies to import white refined (industrial) sugar that is mostly used in manufacture of beverages such as soft drinks, confectioneries and chocolates.
“We don’t produce enough sugar so we must import. Locally we have had cases where millers don’t pay farmers on time and farmers are not motivated to plant cane so we import,” said director-general, Agriculture, Fisheries and Food Authority Alfred Busolo.
According to Mr Busolo importation is necessary to protect consumers from high sugar prices.
Between January and May, Kenya had imported a total of 56,000 tonnes of sugar from Egypt, Madagascar, Mauritius, Zambia and Uganda.
In May, Kenya and Uganda agreed on a quarterly schedule of sugar exports on an average of 9,000 metric tonnes to Kenya. Uganda is reportedly producing about 500,000 tonnes of sugar and consuming about 300,000 tonnes annually.
Government data shows that Uganda had a surplus of 36,000 tonnes during 2014/2015 financial year.
The shortage of sugar in Kenya is partly blamed on the unavailability of cane delivered to factories.
“Some of the millers are operating completely below capacity because they don’t have cane,” said Godfrey Wanyonyi, managing director, Nzoia Sugar Company Ltd. Kenya’s cost of producing sugar has also come under scrutiny with cost per tonne produced estimated at $1,250, the highest in the region and more than double the global average of $500 per tonne.
