Struggling cane millers received a boost after duty on imported sugar was increased 130 per cent to protect local production from cheaper imports.
Sugar importers will be charged Sh44.75 per kilogramme, up from Sh19.40, but millers say some importers fail to pay the taxes.
Treasury secretary Henry Rotich noted that most local millers are on the verge of collapse due to the influx of cheap sugar from regional countries, mismanagement and ageing equipment.
“Most of our factories are on the verge of closing down due to competition from cheap imported sugar,” Mr Rotich told Parliament Thursday.
“In order to protect our sugar industry, I have increased the specific duty rate on imported sugar from $200 (Sh19,452) to $460 (Sh44,739) per tonne,” he added.
Mr Rotich said the duty increase will cushion the sugar sector from unfair competition, enable local factories to break even and pay the farmers promptly.
Kenya is allowed to import duty free sugar from member countries of the Common Market for Eastern and Southern Africa (Comesa) to bridge the annual deficit.
The country is allowed to import up to 300,000 tonnes from the Comesa bloc to meet the annual demand of 700,000 tonnes. Kenya is pushing for reforms in the sugar sector in line with pact inked with Comesa after it extended restrictions on imported duty sugar from the member States.
The reforms include the sale of the State-owned millers to strategic investors, expected to infuse private sector management practices and pump in cash to revamp the ageing plants.
This comes at a time when millers like Mumias are facing financial woes that has forced the Nairobi bourse-listed miller to rely on bailouts from the government, which has a 20 per cent stake in the company.
The miller, which is the largest in Kenya, owes Sh6.5 billion to seven banks.