Kenya eyes new waiver on Comesa sugar imports

Kenya is likely to request for an extension of special safeguards against duty-free sugar imports from the Common Market for Southern Africa (Comesa) bloc, owing to a slowed implementation of reforms.

Under a pact reached with Comesa in December 2007, the country is expected to fully liberalise its sugar market by March 2012 allowing for unrestricted flow of duty-free imports from the bloc.

“Unfortunately we are not ready to beat this deadline…we have been held back by a lot of bureaucracy in the implementation of key reforms that would have made us competitive enough,” Romano Kiome, the permanent secretary in the Agriculture ministry, said.

Critics say Kenya’s sugar industry has been held back by high production costs and a lack of credit for inputs, leading to low yields and an annual national sugar deficit of more than 200,000 tonnes. The high cost of production is linked to poor roads in the cane growing zones as well as aging factory machinery.

This has rendered the country’s sugar industry less competitive against other vibrant producers in Comesa such as Swaziland, Mozambique, Malawi and Zimbabwe.

“We are not sure if there are any provisions for us to seek an extension of the safeguards, but we shall try and table an application to Comesa,” Dr Kiome said. “We shall accept any verdict on the application though an extension would be good for us to put a few things in order before opening up the market to all,” he said. Kenya has previously been granted special quotas on the imports of duty-free sugar from Comesa. The first four-year waiver came in 2003 followed by an extension in 2007.

The waiver in December 2007, however, came with special amendments to avoid contravening Comesa Trade Remedies Regulation which provide for a maximum eight years for the application of any safeguards under the bloc’s trade regime.

Back-to-back waivers between 2003 and 2012 would have translated to nine years against the acceptable eight years. Comesa sidestepped the hitch by amending the regulations to align it with the World Trade Organisation agreement on safeguards which provides for a total of 10 years for developing countries. Officials said reforms in the domestic sugar industry have been delayed by a crowded political calendar as leaders have focused on the implementation of the Constitution and next year’s general election.

“The ministry was ready in good time and provided proposals on tasks to be pursued to make the sugar industry competitive. Unfortunately the implementation of the proposed reforms remains on hold because of bureaucracy and delayed approvals by Parliament,” Dr Kiome said.

Energy policy

Among the key reforms targeted by the government is to privatise Sony, Chemelil, Nzoia, Muhoroni and Miwani millers as part of attempts to attract capital and private skills to boost the ailing firms.

The government was also required to adopt an energy policy to promote co-generation and other forms of bio-fuel energy production that will contribute to making the sugar sector more competitive. A key venture targeted by this was the blending of ethanol and petrol for motor vehicles and other machinery.

aodhiambo@ke.nationmedia.com