Kenya has been granted a nine months extension to limits on sugar imports from regional trade bloc Comesa to enable the country complete reforms that will make its sugar industry competitive, blocking the flow of cheaper sugar from African countries.
This marks a sixth time that the country has enjoyed protection against the influx of cheap sugar from the regional trading market.
Kenya had been expected to open up fully its market to imports from the Common Market for Eastern and Southern Africa (Comesa) States in 2014 after more than a decade of being allowed to protect its sugar farmers with high tariffs.
The tariffs were scheduled to fall to zero in March 2014, but Kenya has continued to seek extensions, giving more time for it to improve infrastructure and carry out other reforms.
Industry players estimate the cost of producing a tonne of sugar at about $900 in western Kenya. The cost is $400 in producing countries such as Mauritius.
“Member States agreed to grant Kenya an extension of the sugar safeguard for a period of nine months to allow it to undertake outstanding domestic reform measures,” states a communique from the meeting seen by the Business Daily.
The decision was reached yesterday during the 43rd council of ministers meeting in Lusaka, Zambia. Kenya’s delegation was led by Trade Cabinet Secretary Moses Kuria (above).
The areas that the sugar sector has not addressed include the payment method, which Comesa has recommended that it be changed from the current mode that relies on weight of sugar cane to that based quality or sucrose content.
Comesa had issued a raft of measures to Kenya, which was supposed to be implemented ahead of liberalisation of the market.
These measures include lowering the cost of production, sugar factories diversifying into other revenue streams such as production of ethanol and cogeneration, change of payment formula and increase production capacity.
In 2019, Kenya was given the longest extension of three years to put its house in order but the window was coming to an end in February 2023 with the country having not achieved all the set conditions.
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The Sugar Directorate had in October said it was seeking another extension to address the pending issues in the sector to make the sugar industry more competitive ahead of the liberalisation of the market, which will see imports allowed into the country without limits.
Kenya has always argued that allowing uncontrolled imports into the country would impact negatively on the sugar sector because of the costly production.
Kenya is allowed to import up to 350,000 tonnes of sugar from the Comesa region to bridge the local deficit.
However, the Treasury limited the quota to 212,000 tonnes last year to protect farmers from the cheap sweetener.