Kigali asks EAC for duty waiver as sugar prices rise
Tanzania, Uganda, Rwanda and Kenya together consume more than 1.5 million tonnes of sugar per annum. Picture: File
Rwanda is facing a sugar deficit that could trigger domestic shortages and push up prices in coming months, as households battle high costs of other essential commodities.
Retail sugar prices have been rising since early this year, with the price of imported sugar increasing to Rwf1,200 ($2) from Rwf,1000 ($1.7) per kilogramme, while locally produced sugar has increased from Rwf800 ($1.4) to Rwf1,000 ($1.7). The country faces a potential shortage of around 20,000 metric tonnes of sugar this year while current consumption stands at an annual 40,000 metric tonnes largely covered by imports from Tanzania, Kenya, Zambia and Malawi.
The price increases are partially attributed to a shortfall in supply as well as the temporary shutdown since April for factory maintenance of Kabuye Sugar Works, the country’s sole sugar producer. Sugar prices pushed world food prices to an all-time record in June, the United Nations Food and Agriculture Organisation said last week.
Kenya’s case
Sugar prices in Kenya have surged as much as 39 per cent as several mills prepare to shut down for their annual factory maintenance. Retail prices jumped to as high as Ksh250 ($2.75) per 2-kilogramme pack last week, compared with Ksh180 ($2) last month.
Rwanda Trade Minister Francois Kanimba said Kigali had written to the East African Community for a waiver of duty on imported sugar to allow it to import from outside the region to bridge the deficit. Sugar from outside the region attracts Customs duty of 25 per cent and a VAT of 18 per cent.
Currently, the country largely imports its sugar from within the EAC or from Comesa member states, in particular within the Free Trade Area that allows sugar to come in zero rated to meet its demand for sugar
“We have asked the importers to contact potential suppliers to start making arrangements for delivery so that we do not have any delays when the waiver is approved,” Mr Kanimba said, adding that global sugar output has been affected by floods that have hit big producers like India and Brazil.
He also mentioned that increased demand from the Democratic Republic of Congo and South Sudan had affected supply. However, he said the government is reconsidering facilitating local producer Kabuye Sugar Works to increase local production in the long term.
The Rwandan Minister in charge of EAC Affairs Monique Mukarulinza, said the request has been tabled before the EAC’s Sectoral Council of Ministers of Trade, Industry and Investment for consideration in their upcoming meeting in August.
“The response should be positive because it will not be the first time a partner state is asking for a waiver — Kenya and Tanzania have also requested one before and it was approved.”
Ms Mukarulinza also mentioned that discussions are still going on to review the EAC Common External Tariff to scrap the 25 per cent import duty on sugar from outside the bloc.
Tanzania, Uganda, Rwanda and Kenya together consume more than 1.5 million tonnes of sugar per annum.
Globally, consumption is forecast to grow at the rate of 2.19 per cent to 165 million tonnes of raw sugar. However, world sugar production has been revised downwards in the recent past (2008/2009) to 149.3 million tonnes raw value. This represents a 12 per cent decrease on 2007/2008 mainly due to the fact that the sugarcane growing area is being reduced and taken up for biofuel production.
