August 31 2009
Imported sugar being off-loaded at the port of Mombasa. Kenya will allow in duty free sugar to ease the current shortage.

The government will allow importation of duty-free sugar in a few days to ease a local shortage and to curb the rising domestic prices.

Agriculture minister William Ruto said on Monday that Kenya plans to let business people to buy the commodity from overseas without paying a 100 per cent duty.

“We have already presented our position to Treasury and the Minister of Finance has assured us he is discussing it with the East African Community so that we are able to import duty-free sugar,” Mr Ruto told reporters in Nairobi on Monday.

He termed the shortage and high price of the household item as a crisis, which has to be resolved urgently. A kilogramme of sugar retailing at Sh70 before July has now shot up to between Sh120 and Sh150 depending on the outlet.

Outside Comesa

In a swift reaction, Mumias Sugar Company, which controls 60 per cent of the local market, said the product coming from outside Comesa trading bloc should not be allowed in duty-free.

Under Comesa, Kenya is allowed to import 260,000 tonnes duty-free sugar and any amount above this attracts 70 per cent duty. Sugar coming outside the region is charged 100 per cent.

“As taxpayers, we request the Kenya Revenue Authority to ensure a fair playing ground for all sugar producers and sellers,” said Mumias Sugar managing director Evans Kidero.

“If any sugar comes from non-Comesa countries it should attract full duties as required under East African Community.”

Sugar Campaign for Change lobby chairman Peter Kegode separately told the Nation that although the minister’s move was laudable, it could be hijacked by what he called sugar cartels.

“The key challenge is how the sugar will be distributed so that consumers get it at a lower price,” he said. “But if we use the same brokers and cartels who have caused this shortage, then prices will go further up.”

Second window
This is a second window to allow sugar importers to bring in duty-free sugar besides the quota allowed by Comesa.

Kenya has since 2000 been enjoying a safeguard on sugar imports aimed at creating a conducive environment for the industry to be competitive. This safeguard allows the country to limit duty-free sugar imports annually.

Mr Ruto said the product imported under the duty-free safeguard had failed to meet local demand, further worsened by closure of local sugar millers for annual maintenance.

Mr Kegode said the government might have to subsidise sugar importers if they are to bring in sufficient amounts. “They have to import huge quantities to be able to stabilise prices otherwise we would be benefiting the cartels,” he said.

While opening a four-day All Africa Horticulture Congress at Safari Park Hotel, Nairobi, Mr Ruto said he will soon gazette rules making it mandatory for farm owners to put 10 per cent of their land under trees, such as mangoes, bananas, oranges and other indigenous types.

“It is a way of managing climate change,” he told delegates.

nation.co.ke