East Africa Business Week, Kampala
Kenya Bracing for Comesa Sugar Imports
By Humphrey Liloba,
17 August 2013
Nairobi — Kenya’s sugar sector is in limbo as the COMESA safeguard period nears its end. COMESA is the Common Market for Eastern and Southern Africa.
Tough times await Kenya’s fragile sugar industry with the impending expiry of the COMESA Sugar Safeguards period.
A report from a survey by Kenya’s Ministry of Trade paints a grim picture if the industry with revelations that the sector may not survive an expected deluge of cheaper imports from COMESA countries once the safeguard window closes.
The imports are expected to come into Kenya duty-free in what will drastically reduce the cost of the commodity in the local market.
There are no indications that the trading bloc may extend the safeguard period given that similar extensions in the past have materialized amid heavy criticism from regional players.
Kenya’s sugar sector is ailing from a myriad of challenges that have seriously impeded its growth and production potential.
Key among these challenges is the heavy hand of politics and the bottlenecks that that blocked a proposed privatization of most of the mismanaged milling firms.
The report by the Ministry indicates that other than Mumias Sugar Company, none of the other seven millers across the country will survive the expected influx of cheaper imports.
The other government owned millers that were recommended for privatization include Chemelil, Nzoia Sugar, South Nyanza, Muhoroni and Miwani Sugar Company Limited.
"Privatization of the millers would have rid them off the current mismanagement and corruption and increased their competitiveness," reads a section of the report released last week.
"The government must fast-track the privatization of these companies if any gains are to be made and the security of Kenya’s future as a sugar producer assured," reads a section of the report.
The Kenyan entered into an agreement with the COMESA Secretariat for the protection of the local sector by way of a safeguard under Article 61 of the COMESA Treaty so that sugar imports from COMESA are subject to customs duties.
The safeguard was implemented in March 2002 for an initial period of 12 months and subsequently renewed by the Council of Ministers.
Kenya is on a fourth extension of two years, which began on March 2012 and ends in February 2014. Other sugar producers in the COMESA region have vowed to resist any attempts at further extending the safeguard.
The coming into force of the devolved government that gave way to counties in Kenya is further expected to delay the privatization process as most county governments now hold charge of any industries and manufacturing plants within their jurisdiction.