Kenya To Continue Importing Duty Free Sugar

In a statement by COMESA secretariat, the council noted that Parliament had approved the privatization of five state owned sugar companies.

Meanwhile, sugarcane farmers in western Kenya are complaining of the falling prices adding that they can barely make ends meet.

With much of the production coming from small rain-fed plots rather than large irrigated plantations, costs are much higher than Kenya’s competitors.

The government, with a 20 percent stake, however, injected 500 million Kenyan shillings into Mumias sugar in January after it lost 2.08 billion shillings in the period July to December which is five times bigger than a year earlier.

Executives were also sacked following an audit by KPMG which further prompted investigations into sugar sale and importation transactions.

The government has sought to protect the industry since 2003 by limiting imports.

EXCESS SUPPLY

But critics contend arguing that limiting sugar imports has not boosted efficiency but instead fostered mismanagement and smuggling.

World benchmark sugar prices have struggled hugely over the past four years against a backdrop of excess supply, with ice raw sugar hitting six year lows last week.

Kenya consumes about 800,000 tonnes of sugar a year, while production is about 600,000 tonnes.

Overall, a tonne of sugar costs about 600 dollars (or 55 thousand shillings) to produce in Kenya, double other COMESA countries.

The rest is imported but duty-free imports are capped around 200,000 tonnes under a deal with COMESA to protect Kenyan producers.

The deal, first agreed in 2003, has been rolled over regularly. In March, Kenya requested a two-year extension.

But other COMESA members are tiring of the requests, experts say.