KENYA – Kenya has written to the Common Market for Eastern and Southern Africa (COMESA) seeking protection from cheap sugar imported into the country from the region, according to Business Daily.
This is not the first time Kenya has written to the free trade area pursuing to limit sugar imports from the region while protecting local millers and industries from cheap sugar.
Currently, Kenya is facing a domestic sugar crisis as a result of numerous importation of duty-free sugar from non-COMESA member states, something that is blamed for over-supplies and the fall of sugar industry.
The move also comes after Kenya signed the continental free trade area agreement few months ago, allowing free movement of goods between African states.
A protection bid may sound cynical for Kenya which was the first to submit the African Continental Free Trade Area agreement to the African Union.
The free trade deal, signed by forty-four African countries is expected to be realized by the end of the year to allow free movement of goods, but its effective is in doubt given the protectionism nature of most African states.
A similar move was undertaken in 2016 as a way to revive the ailing sugar sector which has seen most sugar factories into an economic turmoil.
A sugar crisis
Earlier this week, a technical team from the Sugar Directorate is said to have submitted a report to COMESA on the status of Kenya’s sugar industry seeking extension of the safeguards that limit the amount of imported sugar from member states.
In 2012, Kenya reached the allowable period for the safeguards and in 2016, it secured a two-year extension period ended February 2018 and it is now has requested 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.
He added that allowing uncontrolled imports of sugar will be detrimental to the local sugar industry.
While the decision lies on the Council of Ministers’ meeting that is to happen, an extension may be out of question since Kenya has violated COMESA rules by the recent importation of sugar outside the bloc without seeking approval from the body.
Last year, the country was plunged into a sugar deficit scenario prompting for a duty-free window period that saw importation of 981,000 tonnes of sugar just between May and December.
Some argue that Kenya is not justified to seek for an extension while doing very little to improve the sector ranging from incompetent check on standards to ineffective regulations.
The Treasury last year scrapped duty on sugar following a sharp decline in production that saw the price rise to US$3.97 per two-kilogramme packet.
Kenya only produces 600,000 tonnes of sugar per year but the annual consumption stands at 870,000 tonnes, the rest has to be covered by controlled imports from COMESA where Kenya has a quota of 300,000 tonnes annually.
Is privatization of state mills a remedy?
In the recent past, Kenya was considering privatization of state-owned millers, plus a strategy to 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.
The sale of the factories to private individuals was however rejected by the Council of governors who argued the move may not solve present challenges.
While the government wants to sell a 51% stake in the companies to investors and reserve 24% for farmers and employees, the governors instead want the assets to be handed over to the counties.