Kenyatta defends Uganda sugar deal

Kampala/Nairobi- Kenyan president Uhuru Kenyatta has defended his decision to allow Ugandan sugar imports into Kenya saying it will promote regional integration.

Despite criticism from the opposition leaders in the neighbouring country about his decision, Mr Kenyatta on Wednesday said: “We would rather import sugar from Uganda than Brazil to support our own and promote regional integration”.
Opposition leader Raila Odinga has criticised the new deal, saying it could bring about the collapse of local millers.

“This deal on sugar is sour,” the Daily Nation, our sister newspaper, quoted Odinga as saying. “It comes at a time when Kenya’s leading sugar manufacturer Mumias Sugar is struggling to get back on its feet. Sugarcane farmers across the country are equally struggling as a result of lack of payments.”

Mr Kenyatta said the decision to relax import rules on Ugandan sugar fits within the rallying call for increased intra-Africa trade by removing non-tariff barriers.

“The free movement of African people, and their goods, uninhibited throughout the continent will open new horizons for investment and entrepreneurship,” Mr Kenyatta said on Wednesday while closing the Eastern Africa Regional Pan-African Congress meeting in Nairobi.

“Tanzanians should be able to easily buy Togolese fabric, Nigerians to enjoy Kenyan milk products, and Ivorians to enjoy Ugandan Matooke,” he added.

Traders say sugar from Uganda, which has surplus production, is on average Shs30 cheaper per kilo than Kenya’s.

The deal
During his three-day state visit to Uganda last week, Mr Kenyatta and President Museveni struck a deal allowing cheaper Ugandan sugar into the Kenyan market.

This deal is expected to end the long-running sugar feud over the trading of the commodity across their common border.

The deal also clears the way for Kenyan traders to export beef to Uganda under similar terms, deepening the commercial ties between Kampala and East Africa’s largest economy.

Mr Aly Khan Satchua, a Nairobi based markets analyst with focus on East Africa, said: “Kenya has a perennial sugar deficit. It makes sense therefore to source the deficit directly from our biggest trading partner.”
Kampala City Traders Association chairman Everest Kayondo said: “Kenyan officials made trips to Uganda and were given an opportunity by Kakira Sugar Works to check the crystals to verify whether they matched results which concurred with the exports.”

He urges that both countries as members of the EAC signed the common market protocol which allows each member state to export freely but Uganda has suffered frustration while trying to export to Kenya.

“Kenya should open doors just as Uganda has opened hers to Kenyan businesses and goods,” Mr Kayondo said.

Numbers
Uganda produces about 465,000 tonnes of sugar annually against a consumption of 320,000 tonnes, leaving it with a 145,000-tonne surplus.

Kenya produces an average of 600,000 tonnes annually but consumes between 800,000 and 850,000 tonnes. That is a deficit of between 200,000 and 250,000 which must be offset by imports.

According to statistics, Kenya produced only 590,000 tonnes of sugar last year.

This year, analysts predict may be worse because the largest miller – Mumias – is not doing well having been bailed out of collapse last month.

Kenya’s duty free sugar (the 200,000 tonne quota) is supposed to come exclusively from Comesa states.

Anything from outside Comesa attracts punitive tariff of 75 per cent.

The Uganda Sugar Manufacturers Association has in the past accused powerful sugar cartels in Kenya of using import controls to defeat competition.
Uganda bought KSh60.7 billion (about Shs2.1 trillion) worth of goods from Kenya last year compared with Sh17.5 billion (about Shs591 billion) it exported to Kenya, according to official data.

Numbers

Shs2.1 trillion: The amount worth of goods that Uganda imported from Kenya last year.

Shs591 billion: The amount worth of goods that Uganda exported to Kenya last year.

850,000: The number of metric tonnes of sugar consumed annually by Kenyans on average.

600,000: The number of metric tonnes of sugar Kenya produces on average annually.

465,000: The number of metric tonnes of sugar Uganda produces on average annually.

320,000: The number of metric tonnes of sugar Ugandans consume on average annually.

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