Sugar Exporters Warn of Worse Row With Kenya (allAfrica.com)

Uganda Sugar Manufacturers Association (Usma) has said permits imposed on sugar from Uganda by Kenyan authorities must be removed if the conflict on the commodity’s trade between the two countries is to be solved.

Jim Kabeho, the Usma chairman, said: “We want the permits off. And this will help us to send our sugar freely to Kenya, but as long as there are permits, they are used to control and limit how much sugar we can send to Kenya.”

Kabeho was speaking to reporters at a meeting convened by Uganda Revenue Authority on Wednesday in Nakawa to deliberate with Kenyan authorities on how to solve the impasse.

Every trader exporting sugar to Kenya must get a clearance in form of a permit from the ministry of trade there to ascertain that it is indeed produced in Uganda. This, according to Kabeho, is a barrier and causes delays at the border – defeating the very essence of regional integration where the common market protocol allows free movement of goods and services within the partner states.

“The second problem is now KRA. We get problems on the border where trucks reach there and KRA says they want clearance or permits,” Kabeho said.

The sugar conflict between Uganda and Kenya is a perennial problem and it reached its pinnacle four years ago. In 2011, when Uganda was experiencing an acute sugar shortage, Kampala was then allowed to import duty-free sugar through Kenya to cover up the gap.

Kenyans say Uganda took the chance with two hands, importing more than it needed. A few months later, Ugandans repackaged that sugar to export it to Kenya duty-free, citing the 2010 East African common market protocol. Kenya banned Ugandan sugar and Uganda reacted by banning day-old chicks and beef from there.

Last year in July, Uganda met Kenya authorities in Kampala to resolve the sugar question. They failed. One Kenyan official told this newspaper: “Maybe [there is] mistrust. A lot of sugar comes from outside the region to Uganda and you export that sugar again [to Kenya].”

Last month, the conflict peaked, sparking heated political debate in Nairobi, when Kenyan President Uhuru Kenyatta sealed an agreement with President Museveni that Ugandan sugar exports should go to Kenya while the latter’s milk and beef products are accepted in Uganda.

The opposition in Kenya described the move as “selfish” on the part of Kenyatta and that the cheap sugar from Kampala was bad for their industries. Kenyatta’s family is among the biggest producers of milk and beef products in the region – with Brookside, Kenyatta’s milk firm, entering Uganda after buying Sameer group’s franchise here.

But Kenyatta said: “I would rather get sugar from our neighbour Uganda than Brazil.”

Brazil and Madagascar are the biggest exporters of sugar to Kenya. Yet the trade balance is heavily tilted in favour of Nairobi, with Uganda acting as market for Kenyan products.

Uganda’s total imports from Kenya were $758.9m (Shs 2.7tn) last year compared to the exports of Shs $186.7m (Shs 661bn), depicting a very high trade imbalance between the two countries.

Uganda produces about 500,000 tonnes of sugar annually but the country can only consume 300,000 tonnes. The country only seeks to export the 200,000 surplus. This year’s meeting in Kampala is expected to draw guidelines on sugar trade between the two countries, according to Dicksons Kateshumbwa, URA commissioner for customs.

“We shall sit and deliberate and get back to business and [where we fail to agree], we shall get other bodies on board [so that] issues are jointly addressed,” said Jane Ayeko, an official from KRA.

Meanwhile, Kenya and Uganda have begun joint collection of customs taxes on sugar imported through the port of Mombasa to stop cartels involved in dumping of the commodity in the regional markets, Kenya’s Business Daily reported on Monday.

Sugar consignments cleared in Mombasa for warehousing in Uganda will now be handled under the Single Customs Territory (SCT) arrangement — which allows joint collection of customs taxes by partner states, a move thought to be crucial in solving the conflict.

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