Local sugar manufacturers can now breathe a sigh of relief after the government set a 25 percent tariff on refined sugar imports.
Uganda Revenue Authority (URA) Assistant Commissioner for Trade Irene Muliika announced the new tariff in a June 7 letter to Uganda Manufacturers Association (UMA).
According to Ms Muliika, the import tariff is as per the East African Community (EAC) raw material duty remission scheme for 2023/2024.
URA said this represents a compromise position that protects local producers of industrial refined sugar while also leaving the door open to imports for any user that requires it for technical reasons.
This is against the total ban on imports that had been proposed earlier. The 25 percent duty is in line with most other finished products produced in Uganda.
Previously, producers of industrial refined sugar have been complaining about a lack of market due to massive importation.
Ms Muliika said: “Duty import rates shall be applicable for a period of one year from July 1 and granted upon receipt of a written request from the manufacturer to the Commissioner of Customs.”
The move followed discussions between Ugandan officials and their East African counterparts in Arusha, Tanzania, last week.
Mr Moses Atwiine, a business analyst, said the tariff “is good for local manufacturers because it reduces imports of refined sugar.”
Soft drink manufacturers are the major consumers of industrial sugar. They had complained that the price for locally produced industrial sugar ($1,015 (Shs3.7m) per tonne) was already a disadvantage compared with that of imported sugar ($900 (Shs3.3m) per tonne.
However, manufacturers told the government that the existing import duty remission scheme was being abused by some industrial users who claim higher consumption than what they actually use and later divert the cheap imported white sugar into the retail market.
Some importers who use brown sugar have been importing refined industrial sugar as a substitute for the brown sugar, especially when the sugar prices rise.
The manufacturers pleaded with the government to put in place some measures that protect the local refined industrial sugar production in the country and stop the abuse of the import duty remission scheme.
The government later realised that the abuse of the import duty remission scheme was affecting the export market for the light brown and brown sugar within the EAC partner states, hence causing a big challenge to the entire sugar industry.
It is against this background that the government decided to set the import duty for refined sugar at 25 percent.
Government has in recent years promoted local production of refined sugar purposely for import substitution, creation of jobs and industrial linkages.
It is expected that more industrial sugar producers will now come on board since there is now an appropriate policy in place to protect them from imports.
Officials now say the available refined industrial sugar stocks are enough to supply the local market needs and no single product has gone off the shelf because of lack of sugar.
Industrial refined sugar
While opening Uganda’s first Sugar Industrial plant at Kinyara Sugar Ltd in Masindi in 2022, President Museveni said Uganda was losing $50 million through importing refined sugar.
He described the plant as a step in the right direction.
Kinyara white sugar refinery had an installed capacity of 60,000MT per annum before expanding the refinery to produce 75,000MT per annum in early 2023.
This expansion brought the refined industrial sugar production capacity to 120,000 MT per annum which includes other producers like Mayuge Sugar and GM Sugar.
Kinyara has exported more refined industrial sugar than what has been sold locally.