Kenya is set to cede regulation of its sugar industry to a regional agency in the latest bid to end a long running market access war with Uganda.
The joint agency, described by the two states as “the long term solution to intermittent sugar wars”, will take up the role of licensing and vetting dealers, currently undertaken by national agencies.
The two states are yet to agree on the nature of the inter-state agency whether to make it a single entity located at border points or a joint committee made up of officials from national agencies.
“We will meet in Nairobi in coming days to lay down long term solutions so that this problem does not recur,” Foreign Affairs and International Trade secretary Amina Mohamed said in a statement.
The sugar wars between the two countries have eluded several bilateral agreements since Kenya slapped an initial ban on Uganda sugar in 2012.
READ: Uganda protests Kenya’s move to curb sugar imports
“The two countries are considering formation of a joint body to manage the sub-sector in the region,” Ms Mohamed said.
Under the East African Customs Management Act, sugar produced in the region should be sold in any of the member states without attracting tariffs or administrative restrictions.
Under pressure from farmers and millers, Kenya banned sugar from Uganda in 2012 with regulatory agencies accusing dealers from the landlocked neighbour of abusing the free trade treaty to ship in cheap sugar imported and repackaged from other regions.
Kenyan millers have frequently blamed their woes on cheap sugar smuggled through neighbouring countries.
“They (Ugandan millers) should tell us how it is possible that they are able to produce a surplus, transport it all the way and still offer it for sale below our ex-factory prices,” former Nzoia Sugar boss Saul Wasilwa told the Business Daily in June.
The Uganda Manufacturers Association (UMA) has, on the other hand, blamed the Kenya Sugar Directorate, Kenya Bureau of Standards and Kenya Revenue Authority (KRA) of frustrating free trade.
At a forum in Kampala attended by presidents Uhuru Kenyatta and Yoweri Museveni on Sunday, Kenya pledged to give Ugandan dealers permits to enable them export surplus sugar to the Kenyan market.
READ: Uhuru deal opens Kenya market to cheap Uganda sugar
In Kampala, Ms Mohamed did not make any reference to sustained pressure from farmers as well as the underperforming state-owned millers, insisting instead that reorganisation that included merging of the Kenya Sugar Board with other government parastatals to form the Agriculture, Fisheries and Food Authority was responsible for the delay.
“There was a technical problem in processing of permits but I would want to assure the government of Uganda and the private sector that the issue has been dealt with,” she said.
For President Museveni, the plan to set up a joint sugar regulatory agency comes as a second major gain in as many years since he forged close ties with President Kenyatta’s administration.
Two years ago, he secured a deal to station his customs officers in Mombasa, allowing them to clear goods that pass through Kenya without KRA’s intervention.
Kenya produces about 600,000 tonnes of sugar annually, against a demand of 800,000 tonnes. The remaining 200,000 tonnes is imported duty-free from Comesa states by dealers licensed by the sugar directorate.
Under the deal struck in Kampala on Sunday, Kenya will reserve a quota of 97,000 tonnes to Ugandan traders every year. UMA claims that Uganda’s millers have a capacity of 373,000 tonnes annually against domestic consumption of 70,000 tonnes.
The millers are Kakira Sugar Works, Kinyara Sugar Works, Sugar Allied Industries, Sugar Corporation of Uganda, Sango Bay Estates and Mayuge Sugar Industries.
Kenya’s Foreign Affairs ministry officials said licences would only be issued to suppliers who have been in the cross-border business.