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.”