Uganda’s hopes of resuming sugar exports to Kenya fade

Uganda continues to hope that Kenya will readmit its sugar into its market even as the country indicates an improvement in local production amid an import ban. PHOTO/EDGAR R BATTE

What you need to know:

  • Uganda has been waiting for a verification exercise since December last year. The exercise had sought to prove to the Kenyan government that the sugar that Ugandan dealers and manufacturers export to the country is manufactured here. 

Hope of Uganda resuming sugar exports to Kenya continues to fade as Kenya announces an increase in production, amid a blockade on Uganda’s sugar.  

Kenya’s Ministry of Agriculture has reported a steady “increase in sugar production due to enhanced investments by government and private players” noting that in 2020 alone, industry capacity grew to 603,788 tonnes compared to 440,935 tonnes in 2019, setting off a 37 per cent improvement in local production. 

Uganda had been hoping to resume sugar exports to one of its biggest trade partners due to a  large production deficit but indications suggest otherwise, with Kenya failing to conduct a verification exercise that had been expected in December last year.  

Mr Jim Kabeho, the Uganda Sugar Manufacturers Association chairman yesterday said they don’t know what is going on since Kenya had kept them in the dark in regard to a process that would lead to resumption of exports. 

“Nothing has happened. They said (Kenyan authorities) they are sending a team to do verification. The team was supposed to come in January; they postponed to February now we don’t know when they will be coming,” he said. 

Kenya had sought to verify the origin of Uganda’s sugar exports after it banned it on claims that exporters were dumping cheap and re-exported sugar on its market, which had created problems for local producers.   

However, talks between President Museveni and his Kenyan counterpart Uhuru Kenyatta had created hopes of a resumption with Kenya saying it would increase export permits to 90,000 tonnes subject to verification of production capacity and origin. 

So far, Mr Kabeho said, two verification and inspection attempts have failed to take place and there is less commitment from Kenya on the subject with emphasis now put on improving local production to steer clear of imports. 

The increase in production, according to Business Daily, has also seen sugar prices in Kenya fall in the last two months with a two-kilo packet retailing at an average of Shs6,237 (KSh189) lower than the high of Shs7,650 (KSh225) it traded in January.

However, this comes at a time when the Kenyan government has tightened import measures restricting the amount that can be shipped into the country. 

Kenya has also noted an increase in sugar cane availability with a survey conducted by Agriculture and Food Authority in December 2020 noting that there will be enough cane to produce at least 660,000 tonnes of sugar this year.

Kenya also banned export of Uganda’s sugar cane in December creating an exchange in which Parliament questioned why Kenya had continued to block goods from Uganda yet it was trading freely with Uganda.   

The uncertainty for the resumption of exports has created challenges with Uganda registering a growth in stockpiles in the last two years. 

Last year, Uganda accumulated more than 150,000 tonnes of sugar, worsened by exports blockades from Kenya, Rwanda and Tanzania. 

Data from Bank of Uganda indicate that cumulative sugar exports for the year ended January 2021, dropped to Shs291b from Shs314b in the same period in January 2020.  

Still needed 

Al though, Kenya has been slow to conduct the verification, amid rising local production, local producers still believe, the country still needs Uganda’s sugar due to a huge deficit. 
Mr Kabeho said that even with the improved production, the large deficit in Kenya still presents an opportunity for Uganda’s sugar.   

“Kenya [still] needs Uganda’s sugar because their deficit is too big to be filled by local production. Even if their production increases, they have a deficit of more than 400,000 tonnes,” he said.