East Africa's trade is in the firm chokehold of untouchable barons (Daily Nation (Kenya))

As the controversy over sugar imports from Uganda continues, statistics on imports from January to June this year show that Zambia and Madagascar have been bringing in much more sugar than Uganda.

Clearly, the widely-held belief that Ugandan sugar is the reason our local industry is in peril is a myth.

If you merely go by the number of import declaration forms, you would think Uganda has been the largest exporter of sugar to Kenya. But while Uganda imports have many more entries, the key detail is the volumes per entry.

Sugar from Uganda crosses the border in 27-tonne trucks while the same stuff arrives into the country from Madagascar and Zambia in huge shiploads.

In the period between January and June, the biggest names in the sugar import game were a handful of companies – namely, Phil Mart Ltd, Option Two Ltd and Hydery (P) Ltd, all of which have brought in thousands of tonnes from Zambia.

For instance, in March, Pillar Mart Ltd brought in a single shipload 4,875 tonnes – the single largest quantity to be imported into the country in recent times.

Statistics also show that the biggest sugar importers from Madagascar have been Hussabba Trading Company Ltd and Inland Africa Logistics. Hussaba Trading has brought in at least three shiploads of 2,000 tonnes each between January and June.

Combined, Madagascar and Zambia brought in approximately 32,000 tonnes of sugar between January and June – compared with just under 9,000 tonnes of imports from Uganda within the same period.

Who makes the big bucks from sugar imports from Uganda? Contrary to popular belief, the business is dominated by a clique of sugar barons operating out of Nairobi and Mombasa. Thus, what is at stake is not really the interests of Ugandan millers and sugar growers in Kenya.

Kenyan merchants reap billions from the trade. According to statistics, the major importers of sugar from Uganda between January and June have been Emco (K) Ltd, Sirrocco Investment (K) Ltd, Fuikto Enterprises Ltd, Midland Emporium, the Commodity House Ltd, and Mr Ahmed Sheikh Dahir.

Hardly articulated in the debate on sugar imports is the stranglehold which a small cartel of mainly East Africa Asians have maintained on the industry. It is a tight elite of Kenyan merchants in nearly all segments of the sugar business, doubling as importers, distributors of local sugar, transporters, and owners of giant warehouses.

And they also have interests and links with sugar millers. For instance, one of the largest exporters of Uganda sugar into Kenya, Emco Ltd, is related to Kakira Sugar of Uganda through ownership.

Kanyara Sugar Mills in Uganda is also related in ownership to the second largest miller in Kenya, West Kenya Ltd and Sukari Ltd in Homa Bay County.

The chokehold extends to acquisition and hoarding of sugar milling licences in as many locations as possible and especially in areas adjacent to existing state-owned companies.

The barons then illegally access cane developed by state-owned milling companies, or stop the emergence of new competitors, creating confusion and disorientation in sugar cane production.

These battles only break out in the limelight occasionally – either in the form of controversies over allegations of sugar poaching or in endless court battles over demarcation of sugar zones.

Mumias Sugar and Nzoia and South Nyanza mills have been complaining about sugar poaching. Butali and West Kenya have had an unending dispute over demarcation zones. In Busia county, Polysack Ltd was in 2012 given a licence to put up a sugar mill with a target completion date of December 2016. But the investor has not made a move after he was blocked at the High Court by an incumbent miller.

Perhaps no case illustrates the misery of sugarcane farmers in Western Kenya better than that of sugar farmers in Kabuoch and Ndhiwa parts of Homa Bay County.

Many years ago, they rejoiced at the arrival of Sukari Mills Ltd, saying it would save them from many years of tyranny by the state-owned South Nyanza Sugar Company.

Although the farmers were legally contracted by the state-owned mill, they were only too willing to break away. A major controversy over sugar poaching ensued.

Five years down the line, farmers in Opapo area and parts of Ndhiwa division find themselves with no outlet for their cane. Thousands of hectares of overgrown sugar will be waiting to be harvested.

Meanwhile, the unofficial cartel of private millers, merchants and giant warehousemen have the power and influence to orchestrate artificial shortages.

Indeed, with Mumias Sugar tottering towards insolvency and other state-owned millers in negative capital territory, private millers are having a field day orchestrating shortages by, for instance, going into protracted closures for maintenance and stock taking.

Clearly, cartels have what it takes to influence importation of sugar. The story of sugar cane growing in Western Kenya is one of neglect and exploitation.

For years, the resources and surpluses generated by the industry were not ploughed back to support sugarcane production, marketing and credit schemes – but were expropriated by the State in the form of taxes and levies.

Margins which rightly belonged to farmers and millers, and which should have been spent on improving infrastructure, were seized by the central government to finance other sectors of the economy and other regions.

In DN2 tomorrow: How the mistake of small-holder farming unions made Kenyan sugar unviable Economies of scale demand you need 70 per cent efficiency to put a competitive product on the shelves.

That, unfortunately, is not happening along Kenya’s sugar milling belt: Kenya’s sugar is the most expensive within the Comesa region. This problem seems to have been created during the establishment of the first Kenyan sugar companies in the 1960s. Only in the Daily Nation.


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