KENYA – Kenyan consumers are bracing for an increase in sugar prices following the government’s introduction of a new Sugar Development Levy, which will take effect on February 1, 2025.
The levy, set at four percent of the value for domestically produced sugar and the cost, insurance, and freight (CIF) value for imported sugar, has sparked mixed reactions from consumers and industry stakeholders.
Agriculture Cabinet Secretary Aden Duale announced that the levy aims to fund the Kenya Sugar Board and support initiatives to revitalize the local sugar industry.
However, the implementation of the levy has raised concerns among consumer advocacy groups and opposition politicians
Critics argue that the new tax will disproportionately affect low-income households, which are already struggling with the high cost of living. They have called on the government to address underlying issues in the sugar industry, such as inefficient production practices and smuggling, instead of transferring the financial burden to consumers.
The Sugar Development Levy Order, 2025, seeks to generate funds for research and development, modernize infrastructure, and support farmers.
The Kenya Sugar Board, tasked with collecting the levy, will use the funds to improve cane farming practices, modernize sugar factories, and combat the smuggling of cheap sugar imports into the country.
Kenya’s sugar industry has faced significant challenges in recent years, including declining production, high costs of production, and competition from low-cost imports.
The government hopes that the levy will help strengthen domestic sugar production and reduce reliance on imports.
Despite the criticisms, officials argue that the levy is a necessary step to ensure the long-term sustainability of the sugar sector, which plays a critical role in the Kenyan economy.
They assert that funds collected will be reinvested into the sector to boost productivity and competitiveness.
Meanwhile, the Kenya National Bureau of Statistics (KNBS) reported a 45 percent decline in sugar imports in the third quarter of 2024, with volumes dropping from 162,189.1 tonnes in 2023 to 88,372 tonnes.
This decline has positively impacted Kenya’s foreign exchange reserves, with sugar import expenditures falling from Kes15.16 billion (US$117.1 million) in 2023 to Kes7.89 billion (US$60.9 million) in 2024.
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