Kenya seeks longer COMESA sugar safeguards

August 11, 2011
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, NAIROBI, Kenya, Aug 11 – The government has confirmed that it will seek another extension of the protective mechanisms given by the Common Market for East and Central Africa (COMESA) to enable Kenya implement reforms in the sugar industry.

Agriculture Permanent Secretary Dr Romano Kiome told Capital Business that Kenya will most likely make this request during a COMESA meeting in Maputo, Mozambique on October 20.

“Yes we will ask for an extension. We will actually be going out to consult the stakeholders on how to frame the extension of the COMESA provisions, “he disclosed.

The current waiver that among other things protects the industry from an influx of cheap sugar from the Comesa countries was granted in September 2007 and is due to expire in February next year.

Through it, the country was also allowed to import about 200,000 metric tonnes of duty free sugar to bridge its deficit and meet an annual consumption demand of about 700,000 metric tonnes.

The waiver followed another one granted in 2004 during which time Kenya was supposed to implement fundamental changes such as restructuring its five sugar mills to enhance their competitiveness ahead of the full market liberalisation in March 2012.

The process to privatise the Nzoia, Miwani, Sony, Chemelil and Muhoroni sugar companies has however been delayed, a situation that has largely been blamed on the government.

It is not clear whether COMESA will buy Kenya’s reasons for its failure to implement these reforms and extend the safeguards.

“We will do a lot of lobbying. We may or may not get the extension,” admitted the PS.

Earlier this year, the regional bloc’s Secretary General Sindiso Ngwenya had expressed his satisfaction with the reform measures that Kenya was undertaking saying the restructuring process required time and heavy investments.

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 had said that 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 SG had responded.

These developments are coming at a time when the country is facing a sugar shortage that has significantly pushed prices up.

A two-kilogram packet of sugar is now retailing at Sh285 up from an average of Sh190 in June 2011.

Some supermarkets have been forced to ration the commodity, a situation that is also being blamed on the closure of many factories for stock taking and maintenance.

In addition, production has been affected by the adverse weather conditions while cane has become scarce due to competition from the millers.

The situation is likely to persist with the government appearing helpless to address it.

“We have multiple problems within the sector and we are expecting these problems to continue haunting us,” Dr Kiome acknowledged.

The only recourse that the government has is to ensure that the privatisation program is back on track and to encourage increased production, measures which are long term and which might not provide relief to consumers in the mean time.

Should COMESA go ahead and remove the safeguards, it remains to be seen whether that would translate to cheaper sugar for the consumers.

This is because as a whole, COMESA just like the rest of Africa is a net importer of sugar.

Africa produces nine million Metric Tonnes (MT) per annum but consumes 15 million MT.

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