Uganda’s government finds itself in a dilemma over whether to scrap the 10 percent duty remission on imported industrial sugar.
Patrick Ocailap, deputy secretary to Uganda’s Treasury and Deputy Permanent Secretary in the country’s ministry of finance, told The EastAfrican that withdrawal of the privilege can be compensated through local production of industrial sugar which plays into the push for import substitution, creation of jobs and industrial linkages.
So far, the Uganda Sugar Manufactures Association (USMA) says it had negotiated for a delay in the withdrawal at least until the next fiscal year, according to USMA Secretary-General Wilberforce Mubiru.
The industrial sugar off-takers pushing for the stay of duty remission appealed to the East African Business Council (EABC) for redress. They cited high costs driven by inflation, expensive power, taxes and failure of local factories to satisfy the demand for industrial sugar in the market.
“The demand for industrial sugar reached 130,000 metric tonnes last year, but only 35,000 tonnes were available for off-takers,” Crown Beverages CEO Paddy Mulamira told The EastAfrican on April 12.
Soft drinks manufacturers are the key users of industrial sugar.
They complain that the price for locally produced industrial sugar ($1,015 per tonne) is already a disadvantage compared with that of imported sugar at $900 per tonne.
“This is why despite availability of industrial sugar in the country, demand is low,” Kinyara Sugar Works Managing Director Ramalingham Ravi said.
The firm launched an industrial white sugar refinery in Masindi District last year February but by year-end, Uganda had licensed six other companies to produce refined industrial sugar.
“Uganda is the only country in the region producing industrial sugar and when duty remission was removed, we had to dialogue because it disrupted production and altered business plans that had been made based on the remission,” Simon Kaheru, EABC vice-chair told The EastAfrican.