Cane being transported to millers. Most of the cane processed by Kenyan
and Rwandan factories is supplied by smallholder farmers. PHOTO | FILE |
NMG
Kenya is seeking to stop illegal sugar imports coming from
Somalia, Tanzania, Uganda and South Sudan as part of its plan to revamp
its sugar sector and improve production.
A
Sugar Industry Stakeholders Report recently released by a taskforce
appointed by President Uhuru Kenyatta has also recommended the barring
of local millers from importing sugar from Common Market for Eastern and
Southern Africa (Comesa).
The report blames the imports for the glut in the market, and causing a slump in local sugar prices.
“Lack
of a nationwide availability of local affordable sugar especially along
the long porous borders encourages seepage of illegal sugar into the
country,” the report says.
“This sugar is not only cheaper but its quality cannot be vouched for, exposing consumers to health risks.”
Kenya
is currently a net importer of sugar mainly from Comesa countries. The
Comesa imports are duty free, meaning the sugar is cheaper than the
locally produced, giving incentives for more imports.
Further, the country does not produce refined
sugar, and relies on imports, creating an opportunity for diversion of
the same to the consumer market.
“In
the past, millers have been allowed to import sugar during periods of
shortage. This creates conflict of interest where the millers now tend
to concentrate on sugar importation as opposed to sugar milling, to the
detriment of the local sugar industry.”
The
report warns that a sizable amount of unaccustomed sugar is smuggled
into the country through the porous borders, causing a distortion in the
market, compromising quality and leads to loss of government revenue.
The report recommends an enhanced inter-agency surveillance to curb smuggling.
It
also takes issue with some countries in Comesa for capitalising on the
Rules of Origin as provided under the Comesa Treaty, to export sugar to
Kenya from third countries resulting in dumping.
Kenya
is a member of the EAC Customs Union, the Comesa Free Trade Area. The
multiple regional economic configurations have conflicting regulatory
frameworks and trade protocols.
“We
want to negotiate with Comesa to ensure that net importing countries
within Comesa do not export to Kenya,” the report says. “Enhance
inter-agency surveillance to enforce Comesa provisions on rules of
origin.”
Kenya has had a number of
disputes with Comesa and EAC member states over sugar related trade
issues while implementing existing protocols and treaties.
“These
issues have touched on the Rules of Origin and Common External Tariffs.
In addition, due to different levels of development of member states,
there has been disagreements especially over signing of Economic
Partnership Agreements EPAs.”
The
report recommends; “Active engagement in the harmonisation of sugar
trade policy through the Tripartite Free Trade area which encompasses
the Comesa, EAC and Southern Africa Development Community (SADC).”
The
country is also a signatory to the Comesa Free Trade Agreement which
provides for quota free and duty free access of all commodities from
member states.
Under the Comesa FTA agreement, sugar from partner states is exported to Kenya on a duty free, quota free basis.
In
2002, Kenya applied for and got protection for the sugar sector by way
of a safeguard under Article 61 of the Comesa Treaty so that sugar
exports from Comesa to Kenya are subject to Customs duties.
The
report notes that the Comesa safeguards extension ends in 2021. The
industry is expected to have met the outstanding conditions and be
competitive by 2021 and start the privatisation of public owned mills by
June 2020.”
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