Kenya risks missing the Common Market for Eastern and Southern Africa (Comesa) deadline on sugar safeguards if the State-owned mills are not sold by next year, opening floodgates for cheaper imports.
The Sugar Taskforce Report notes the country is still lagging behind in implementing two outstanding conditions out of the ten initial ones even as the Comesa protection expires next year.
The two critical conditions still pending include privatisation of the five sugar millers and transitioning of the payment system from the current weight-based to sucrose content.
“The industry is expected to have met these outstanding conditions and be competitive by 2021. It is therefore recommended that all efforts be put in place to ensure Kenya is self-sufficient in sugar production by 2021 on a cost-effective basis,” said the report.
The report notes Kenya has been granted sufficient time to be regionally and globally competitive in sugar production but is still lagging behind in efforts to transform the sector.
The safeguard against regional imports were first implemented early 2000s for an initial period of 12 months and but has subsequently been renewed nine times by Comesa Council of Ministers.
Kenya is a signatory to the Comesa Free Trade Agreement (FTA), which provides for quota free and duty free access of all commodities from member states. Under the Comesa FTA agreement, sugar from partner states access the Kenyan market on a duty-free, quota-free basis.
The country has a limit of 350,000 tonnes allowed in the country annually to prevent dumping of the commodity, which would have a negative impact to the ailing sugar industry.