Commodities

Cheap sugar imports threatening domestic factories, says official

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By Stephen Otage

Posted  Wednesday, May 28  2014 at  01:00

In Summary

Local sugar millers want government to clamp down on tax-free sugar.

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Kampala

The Uganda Sugar Millers Association has raised an alarm over tax-free sugar which is flooding the local market saying local factories could soon shut down due to lack of protection.

In an interview with the Daily Monitor on Monday, Mr Jim Kabeho, the chairman Uganda Sugar Miller’s Association, said local factories are facing closure if nothing is done to clamp down on tax-free sugar which mainly comes from the Southern Africa Development Community (SADC) member states.

“Tanzania is not monitoring its borders and cheap sugar which is not attracting taxes is coming in from SADC member states. Uganda is the only country currently producing sugar in surplus of 150,000 tonnes meaning we shall not have where to sell the surplus sugar,” he said.

He added that Kenya is still barring Ugandan sugar from entering its market yet authorities claim the East African Community is an open market to members, a situation that has worsened Uganda’s sugar dumping problem. “The sugar coming from the SADC member states does not attract taxes because the farmers get subsidies from the exporting companies and this will kill our market yet in Uganda, we have to pay taxes,” he said.

When contacted, Mr Cyprian Batala the commissioner external trade in the Ministry of trade, disputed the claims and urged the sugar manufacturers to carry out research before making allegations. “Our EAC common external tariff on sugar still stands at 100% or $200 per ton of imported sugar cash in freight whichever is highest and this has worked for us since 2006 to protect the local industries from sugar imports,” he said.

In response, Mr Kabeho said all sugar coming through Rwanda, Tanzania and the Democratic Republic of Congo is imported without paying taxes. “What do they mean that URA is collecting taxes when all the sugar coming through Rwanda, Tanzania, Kenya and DR. Congo is imported without paying taxes,” he wondered.

Kenya’s protectionism against sugar imports

Kenya was first given the protection from cheaper sugar imports from the Comesa region in 2004. The safeguards, extended in 2008 and 2012, expired in February this year. In 2012, the Kenya Sugar Board barred Ugandan sugar from entering Kenya citing concerns over its
origin.

The neighbouring country claimed that Uganda was repackaging duty-free sugar which it imported in bulk at the height of sugar deficit which resulted into public demonstrations over high sugar prices. According to the authorities, Kenya is merely protecting her local market from competition.

sotage@ug.nationmedia.com