Politics and policy
Sugarcane delivery at the Mumias Sugar Company factory. PHOTO | FILE
By NEVILLE OTUKI, notuki@ke.nationmedia.com
In Summary
A cloud of uncertainly is hanging over the local
sugar industry after a deal that has locked out cheap imports expired
Sunday without a clear guideline from market regulators.
The local firms said the expiry of the Common Market for
Eastern and Southern Africa’s (Comesa) safeguards on Sunday has left
them exposed to cheap sugar smuggled from other parts of the world.
“Our sugar can compete on equal footing with that
from Comesa but we are concerned the opening of the market will
inevitably result in increased dumping of illegal sugar,” Kenya Sugar
Millers Association (KSMA) chairman Rai Tajveer told the Business Daily last Friday.
The Ministry of Agriculture had applied for another
two-year extension, the fourth it is seeking, on the imports quota
despite, hoping to conclude pending reforms to boost competitiveness of
the local sugar industry by 2017.
On Friday, the millers played down concerns of a
looming loss of market share to foreign sugar but warned of likelihood
of increased dumping of the illicit commodity into the market in the
absence of tight surveillance.
Mr Tajveer raised the red flag over a lack of tight
monitoring of imports, saying local millers were already facing
competition from illicit sugar imports even with the safeguards in
place.
“This will compound the problem of dumping of sugar
in the country, if left unchecked,” he said citing Madagascar and
Somalia as popular source markets of illicit imports.
But a decision by Kenya to maintain the ban on
imports, on the basis that it is awaiting Comesa’s decision following
appeal for more time, could hurt its relations with trade partners such
as Egypt, Sudan and Uganda eyeing the local market.
The three states which are huge markets for Kenya’s exports such as tea and building materials could choose to retaliate.
Agriculture secretary Felix Koskei said local
millers were not ready for competition, citing challenges such as high
cost of production and mismanagement – hence the appeal for a further
extension.
“We are waiting for the report from Comesa,” Mr Koskei told the Business Daily.
A decision by the Comesa secretariat to strike down
Kenya’s request, as it has recently indicated, would open the
floodgates for cheap sugar imports from 18 partners and take competition
to the doorsteps of struggling local millers.
Among the conditions set by Comesa when it first
granted safeguards included privatisation of State-owned millers and
diversification of their revenue streams.
It was only last week that Parliament approved sale
of public sugar firms, paving the way for the long process of
privatisation to start.
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