Kenya’s sugar millers need to quickly adjust to the realities of a free market economy if they are to survive competition in the coming years.
From 2019, the protectionist measures currently enjoyed under a deal with the Common Market for Eastern and Southern Africa (Comesa) will most likely end and only the most efficient sugar producers will remain relevant in such a more competitive environment.
This why it is important for the millers, for the time being, to invest in tackling key impediments such as high cost of production than incessantly whining about cheap sugar imports that eat into their sales.
In recent weeks, sugar has been piling up in Western Kenya factories and the millers are once again blaming cheaper imports.
This is no doubt a cyclical problem we can easily remedy through temporary policy action such as going slow on importation as we focus on addressing the deeper challenges facing the industry.
We must point out that those tasked with managing the sugar industry have been a big letdown. Reforms prescribed to improve the competitiveness of the sugar industry, including the privatisation of government-owned mills, upgrading of milling machines and adoption of high-yield cane varieties, have taken too long to implement.
We have instead been treated to years-on-years of empty rhetoric while other rival nations surged ahead in terms of competitiveness. It is high time this matter is handled decisively so that we can progress as a sugar producing country.
The economic potential of the sugar industry remains high, but this can only be realised if its managers handled matters more professionally.
It is absurd that with barely two years to the end of the special safeguards on duty-free sugar from Comesa, the industry remains in a sorry state despite billions of shillings in bailout funds.
All the State-run millers are choking with debt and operate way below capacity due to insufficient raw material and ageing machinery.
Workers in most of these factories are a demoralised lot due to months of unpaid salaries. The sale of the State-owned mills should be concluded soonest possible so that we could have more business-focused investors managing the industry.
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