Nairobi says it has not met the conditions set for protection of its nascent and struggling sugar industry to allow free inflow of cheaper imports
Kenya has once again written to the Common Market for Eastern and Southern Africa (Comesa) seeking protection against importation of cheap sugar from the region.
The move comes just months after Kenya ratified a continental free trade area agreement that allows free movement of goods between African States and in the wake of a domestic sugar crisis caused by importation of large amounts of duty-free sugar from non-Comesa member states.
Kenya imported 981,000 tonnes of sugar between May and December last year following the opening of the duty-free window to bridge the local deficit. It has now emerged that a technical team from the Sugar Directorate on Wednesday submitted to Comesa a report on the status of Kenya’s sugar industry seeking extension of the safeguards that cap the amount of sugar that member states can sell to the country.
The protection measures, which Nairobi has sought and got for the past 10 years, are meant to protect the country’s nascent sugar millers from cheap imports.
Kenya, having exhausted the allowable period for the safeguards in 2012, was given two more years in 2016 which ended in February 2018, prompting the current request for more time at the ongoing Comesa meeting in Lusaka, Zambia.
“We are seeking more time because we have not met the conditions issued to us,” said Trade Principal Secretary Chris Kiptoo.
Kenya will know its fate tomorrow when the 38th session of the Council of Ministers sits to deliberate on the issue.
The ministers’ meeting will be followed by the Heads of State and Government forum on Wednesday and Thursday next week that is expected to confirm the appointment of a new Secretary General to replace Sindiso Ngwenya, whose term has come to an end.
Dr Kiptoo, who is representing the Trade Cabinet Secretary during the council of ministerial meeting, said allowing uncontrolled imports of sugar will be detrimental to the local sugar industry.
Kenya was the first country to submit the instruments of African Continental Free Trade Area to the African Union, making awkward its latest case for protection.
The treaty, which allows free movement of goods, is expected to become operational by the end of the year and pundits argue that protectionism that is common in many African countries will hinder its effectiveness.
Economist Ansetze Were said there is no justification for Kenya to seek an extension of the safeguards while doing nothing to address the underlying sugar sector issues.
“The government is not dealing with the real issues here but is busy seeking protection for an industry that is not competitive at all,” she said adding that Nairobi should instead move away from the safeguards to addressing high cost of production and inefficiencies on the home front.
Besides, Ms Were said, Kenyans are paying a high price for sugar because of the safeguards, whose effect has been to restrict free movement of cheap sugar.
It is not clear whether the country will get another extension after it violated the Comesa rules with recent importation of sugar from outside the regional bloc without seeking approval from the body.
The Treasury last year scrapped duty on sugar following a sharp decline in production that saw the price rise to Sh400 per two-kilogramme packet.
Kenya produces about 600,000 tonnes of sugar a year against an annual consumption of 870,000 tonnes, leaving the deficit to be covered by controlled imports from the Comesa where Kenya has a quota of 300,000 tonnes annually.
Kenya was to privatise its State-owned millers, introduce an early maturing cane, pay its farmers based on sucrose content in their cane as opposed to the current weight-based payments and address high cost of production that stands at about Sh9,000 per tonne compared to Sh4,000 in Mauritius.
The Council of Governors has rejected the sale of sugar factories arguing it will not solve farmers’ problems. They instead want the assets to be handed over to the counties.
The government plans to sell a 51 percent stake in the companies to strategic investors and reserve another 24 per cent for farmers and employees.