Kenya has been granted a one-year extension to sugar import limits from a regional trade bloc to give it time to overhaul its ailing sugar industry, a Kenyan minister said on Monday.
The arrangement capping cheaper imports from Common Market for Eastern and Southern Africa (COMESA) was scheduled to expire in February 2016 but Kenya pleaded for more time to fix its sugar industry.
“This COMESA extension will give interim comfort to the sugar sector in Kenya, enabling the ongoing privatisation process,” Adan Mohamed, minister for enterprise and industrialisation said on his Twitter feed.
Kenya on Friday invited bids for the purchase of stakes in five state-owned sugar companies, as it looks to complete reforms aimed at making its sugar industry competitive.
The government will sell a 51 percent stake in the five sugar companies to strategic investors and reserve another 24 percent for farmers and employees.
Kenya produces about 600,000 tonnes of sugar a year, compared with annual consumption of 800,000 tonnes. The deficit is covered by strictly controlled imports from COMESA.
Experts have blamed a high cost of production for the woes facing Kenya’s sugar industry. Poorly funded government factories have aging machinery that is prone to breaking down. The roads in most sugar growing areas are also in poor shape.
The Kenya Sugar Directorate estimates the cost of producing a tonne of sugar at about $570 in western Kenya compared with $240-$290 in rival producers such as Egypt.