Tanzania agrees to open up its market for Ugandan sugar

Thursday March 5 2020

Inspection: Trade Minister Amelia Kyambadde (C)

Inspection: Trade Minister Amelia Kyambadde (C) together with Mr Japheth Hasunga (in blue suit) speaks to workers at Kakira Sugar Works last Sunday. PHOTO BY PAUL MURUNGI  

By PAUL MURUNGI

Tanzania has partly allowed to open up its borders to Ugandan sugar exports following more than a year of being locked out.

This was revealed by Mr Japheth Hasunga, the Tanzanian Minister of Agriculture, who, together with a delegation from Tanzania, was in the country to understand Uganda’s sugar production and its capacity.

However, he noted, the sugar will be traded under a new arrangement that will only involve government-to-government.

“We are satisfied with the current rate of Uganda’s sugar production and we shall start with 30,000 metric tonnes, but that will depend on the prices, we don’t know how much the factories will charge and then we shall place another order. We shall start business as soon as possible,” Mr Hasunga said,

Previously, the Tanzanian government had been issuing permits to dealers and millers.

Mr Hasunga also noted that it was much better “we start trading between ourselves to promote the East African integration”, adding there will be no “change in Import Duty because all the goods being produced in East Africa have a rule of origin”.

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The move is expected to increase Uganda’s sugar exports that had dipped after Tanzania closed out the country’s sugar.

Ms Amelia Kyambadde, the Minister of Trade alongside sugar producers and other stakeholders led the Ugandan delegation in the discussions that sought to broker a trade deal for Ugandan sugar.

The negotiations, she said, were still ongoing and details will be divulged at an appropriate time.

The two countries went into the sugar trade negotiations after Ms Kyambadde and Mr Hasunga made a tour of Uganda’s four sugar factories last Sunday among them Kakira Sugar Works, Kinyara, Sugar Corporation of Uganda Limited.

“The purpose of this visit by Tanzania’s Agriculture minister is to establish whether we can do business together as two countries since Uganda has been declared a sugar surplus country. This in a way is to verify whether we have the capacity to sell to them,” she said.

Tanzania, Ms Kyambadde said, has been mainly importing sugar from Brazil but they now want to come closer and buy from us.

Uganda has 11 operational sugar mills but with only four big ones.

“Our negotiations are to sum the tour we had in different sugar factories but also harmonise our thinking of how Uganda can trade with Tanzania,” Ms Kyambadde said.
Uganda currently exports much of its sugar to DR Congo, South Sudan and Zambia. Sugar exports to Tanzania had stalled after a ban about two years and efforts to revive the trade had not yielded fruits.

As of September 2019, data from the Ministry of Finance indicate that Uganda exported 130,090 metric tonnes of sugar, which translated into $83m (Shs310b).
Ms Kyambadde said this was very low thus the need to do better.

According to Ministry of Trade data, Uganda’s total sugar production currently stands at 510,000 metric tonnes.

However, only 360,000 metric tonnes are consumed, creating a surplus of 150,000 metric tonnes.

Ascertaining production capacity

According to Mr Hasunga, Tanzania is currently suffering a deficit in sugar production with demand outstripping supply, noting that annual production capacity stands at 300,000 metric tonnes per year, which presents the country with a deficit of 90,000 metric tonnes.

Mr Sam Mugamba, the Deputy Agricultural Manager at Kinyara Sugar welcomed the move, saying there has been a lot of excess sugar in the country thus creating a huge surplus.

Previously, Tanzania had put a blockade on Uganda’s sugar exports accusing the latter of importing and repacking it for export.

However, while responding to Tanzania’s accusations. Mr Hasunga said: “We heard allegations that Uganda has no capacity to produce enough sugar. That’s why we were given special instructions to tour and assess the factories’ capacity in terms of production capacity before we import.”

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