Kenya wins one-year extension to Comesa sugar import curbs


Mumias Sugar Company factory. The machinery at most local sugar mills is outdated and prone to breakdowns. PHOTO | FILE

A key Common Market for Eastern and Southern Africa (Comesa) committee has recommended that Kenya be granted a one-year extension to limits on sugar imports from the trade bloc, offering relief to local millers that feared competition from cheap producers.

The Comesa Trade and Customs Committee agreed to Kenya’s application for more time to open up fully its market to imports 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 February, but Kenya sought an extension until 2017, giving more time for it to improve infrastructure and carry out other reforms — marking the fight time it’s getting a reprieve.

“The Kenyan sugar sector should be given a one-year extension of their existing safeguard subject to review and renewal for another one year,” reads one of the recommendations from the Trade and Customs Committee.

The Council of Ministers will meet on 26th and 27th of this month in Addis Ababa during the 18th Comesa Summit to approve the decision on the recommendations of the Trade and Customs Committee.

READ: Why Kenya seeks extension of Comesa sugar quotas

The safeguards allow Kenya to limit the entry of sugar imports to 350,000 tonnes to plug the annual production deficit. The trade arrangements with Comesa were first drawn up in 2002, but Kenya has implemented few reforms meant to make its sugar industry competitive.

Industry regulator Kenya Sugar Directorate estimates the cost of producing a tonne of sugar at about $570 in western Kenya. The cost ranges between $240 and $290 in Egypt.

Critics have blamed a high cost of production for the woes facing Kenya’s sugar industry. Poorly funded government-owned factories have aging machinery prone to break down.

The Comesa committee, which is composed of representatives from member states, met last month and came up with what they considered as “a win-win approach” to protect the ailing sugar sector.

Kenya has over the past decade pledged to sell a 51 per cent stake in five sugar millers to strategic investors in line with reforms aimed at making the industry competitive.

The government was to reserve another 30 per cent for farmers and sell the remaining 19 per cent stake in the Sony, Chemelil, Nzoia, Muhoroni and Miwani milling companies in an initial public offering once the factories are profitable.

The privatisation of the five is set to delay after MPs adjourned debate on a Motion seeking approval for sale of the companies.

This followed the presentation of a public petition to the House seeking to have land on which the mills stand reverted to the government or communities.

Last week, the government said it would continue to block sugar imports from neighbouring states up to the end of this month as industry regulators await the resolution of Comesa ministers.

Agriculture PS Sicily Kariuki said the sugar market remains controlled until Comesa ministers make the final decision over an appeal that Kenya has lodged with the regional bloc to have safeguards extended for another two years.

“We will soon be making a conclusion, but at the moment we are awaiting the outcome of the Council of Ministers meeting,” said Ms Kariuki.