COMESA happy with Kenya sugar reforms

March 30, 2011
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, NAIROBI, Kenya, Mar 30 – COMESA has expressed its satisfaction with the reform measures that Kenya is undertaking in the sugar sector before the full liberalisation of the market next year.

Although the reforms are being implemented when the deadline for the expiry of the safeguards are scheduled to expire in February 2012, COMESA Secretary General Sindiso Ngwenya acknowledged that the restructuring process to put the industry in order requires time and heavy investments.

"The reforms have been made… what is important is to get the investments but it is not very easy. For instance if you want to list some of them (factories) on the stock exchange, you have to deal with the issue of debt. I think the government, through policy has done quite a lot," said Mr Ngwenya.

The process to privatise the Nzoia, Miwani, Sony, Chemelil and Muhoroni sugar companies started as far back as eight years ago but delays on the side of the government meant that the sector could not be opened up for other sugar producers in the economic bloc.

Kenya was subsequently granted an extension in 2007 to give it time to boost the competitiveness of its factories.

As a sugar deficit country with an annual production of 500,000MT of white-milled sugar, it was also allowed to import 200,000 metric tonnes of table and industrial sugar to enable it meet its consumption requirements.

However with only about 10 months to go to the removal of the protection measures, the privatisation process, which has been approved by Cabinet, is now awaiting the green light from Parliament.

Asked whether COMESA would consider extending the deadline for Kenya so that local farmers don\’t suffer from an influx of sugar come March next year, Mr Ngwenya said such a request would be considered against the progress made in the sector.

"When we have it (the request), then we can discuss because we do not want to pre-empt the process. We also do not want to send the signal that the government should wait in anticipation that there will be an extension," the COMESA SG said.

Trade Permanent Secretary Eng. Abdulrazaq Ali was also quick to point out that the country would only ask for an extension if the ongoing privatisation of sugar factories stalls.

"We delayed for a while because of the formation of the Privatisation Commission but now we are moving and we will just watch. If anything happens that makes us believe that we are not going to achieve our objectives in the near future, then we will ring the bell and say that we have cause to worry," Mr Ali said.

Should the country fail to ensure a competitive sector by next year and COMESA declines to give another extension, the consumers would be the major beneficiary as the price of sugar would come down significantly.

However, consequences would be that only about three out seven millers that are considered the strongest would survive while the weak ones would collapse.

In addition, the livelihoods of the six million households who depend directly and indirectly on the sector as well as a third of the economy would be at stake.

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