Kenya has received yet another reprieve limit on sugar import safeguards.
According to Kenya’s local newspaper Business Daily, the safeguards set by Common Market for Eastern and Southern Africa (Comesa) which gives a market access at a zero-rate tariff to goods from member states will run until 2017.
This one year extension will give the East African country amicable time to improve infrastructure and carry out reforms in the industry. Nonetheless, the Kenyan government is awaiting Comesa’s ruling later this month in Ethiopia.
The safeguard which has been in place for 12 years, officially expired on 1 March.
According to Ecobank’s latest report on Kenya’s sugar outlook, the East African country’s is likely to face difficulties in implanting reforms in the sugar industry because of the interlocking stakeholder and political interests in the country’s sector.
“To date, progress with reform has been at a glacial pace, with Parliament only authorising the privatisation of five state-owned sugar mills last week,” the report read.
“Some MPs [Members of Parliament] advocate consolidation of sector to make it commercially viable, but this is opposed by Western county governments, which have been demanding equity in the five sugar mills.”
Nonetheless, the country’s plans to complete the privatisation of Chemelil Sugar Company, Nzoia Sugar Company Ltd, South Nyanza Sugar Company Ltd, Muhoroni Sugar Company Ltd and Miwani Sugar Company have once again stalled.
While the privatisation of the companies will inject more capital, diversify and make the industry more competitive, MPs adjourned the debate on the motion to privatise the companies demanding that the report be amended before passage.
The government applied for protection for the sector by way of a safeguard under Article 61 of the COMESA Treaty in 2003 to run till 2008 so that sugar imports from COMESA are subject to customs duties. Since then, the safeguards have been extended.
Under the Comesa safeguard, Kenya is allowed to limit the entry of imported sugar to 350,000 tonnes needed to meet the annual production deficit.
Kenya produces about 600,000 tonnes annually but not enough for its market. The country’s potential demand is approximately 800,000 tonnes leaving a net deficit to be filled by imports.