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Editorials

EDITORIAL: Proposal to reinstate sugar levy a good move

Transporting sugar
Transporting sugar in western Kenya. FILE PHOTO | NMG 

The push to reinstate the Sugar Development Levy (SDL) is a worthy cause that should be supported for the sake of thousands of farmers and households hurting from the collapse of the once vibrant industry.

A taskforce formed to revive the industry has recommended the return of the charge at a steeper rate of seven percent on both imports and ex-factory prices of the commodity.

This is a revision from the five percent charged previously. This is a sensible step going by the turmoil in the sugar industry ever since former Treasury Secretary Henry Rotich implausibly scrapped the levy in 2016—planting a kiss of death, especially on State-run millers such as Chemelil, Muhoroni, Nzoia and Sony which are in the red financially with thousands of workers going for months without pay.

The SDL was for many years the only source of loans for cane development and also financed construction of roads and bridges in the sugar growing zones as well as subsidised fertiliser.

And that is not all, the government also frequently tapped into the SDL kitty to bail out the struggling sugar millers.

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The benefits of the SDL proceeds since its creation in 1992 have therefore been noticeable and all stakeholders including millers, farmers and the Kenya Sugar Research Foundation(KESREF) remained well supported unlike today when all in shambles with no kitty to turn to.

Contrary to popular belief that the sugar industry in Kenya is not viable, privately- owned millers such as Kibos, Sukari, Butali and Trans Mara are making money and thriving.

The State-run millers would do the same if SDL funding is restored to finance key issues including replacement of their aging milling plants that hampered their competitiveness. As a consumption tax, the SDL is practical and the government should work to have it reinstated soonest possible. Given the current tough economic times, the SDL offers a quick and direct alternative source of finances for the sugar industry.

If restored, those tasked with managing the sugar industry should however ensure the proceeds from the SDL kitty are put into proper use. This would require ethical managers to run the show.

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