Sugar rage getting out of control
By Mohammed Shidiye
As the Cabinet squabbles over the importation of duty-free
sugar, poor Kenyans are suffering for the sins they have not committed.
The issue of sugar has now become a matter of national
interest and urgent action needs to be taken before things get out of hand. The basic
rights of Kenyans, now being abused by a few prominent personalities in government, should
be respected.
Fears are growing that the country could be locked out of
the Common Market for Eastern and Southern Africa for failing to abide by trade
regulations. If this happens, Kenya could lose the Sh400 million market.
The Government should steer clear of affairs of the sugar
industry in accordance with the World Trade Organisation’s (WTO) liberalisation
policies. It is also about time the Government re-evaluated its role in the running of key
sectors of the economy.
Kenya’s exports have proved to be the most
uncompetitive among Comesa member countries, and this should be reversed with better
management.
Kenya is, however, still one of the biggest beneficiaries
of the Comesa trading arrangement.
The country exports US$800 million worth of goods to the
region compared to its imports estimated at US$240 million.
Above all it is also one of the biggest consumers of sugar
in the region. The sugar sub-sector, whose contribution to the economy is enormous, is now
in the doldrums.
Kenya pays US$250 per ton of sugar, the highest price in
the region, which is a result of inefficiencies in the sector.
It is the responsibility of the Government to create an
enabling environment for the business. To improve on our competitiveness, the cost of
production must substantially come down.
The Government should address the fundamentals that are
reducing the competitiveness of Kenyan sugar in the regional market. These include poor
state of the roads, high taxation and the high cost of energy and telecommunication.
The Sugar Act 2001, which formed the Kenya Sugar Board
(KSB), is flawed. Section 27 (l) of the Act states that all sugar imports into the country
shall be subject to the prevailing import duties, taxes and other tariffs and that they
will be controlled by KSB.
Through this section, KSB was given power to control
importation of sugar without any regard to the Comesa treaty.
KSB, on the other hand, does not control local production
nor issue quotas for the production to the millers. KSB should not control imports, yet
that’s what it is doing.
The Minister for Agriculture Kipruto arap Kirwa endorsed
The Sugar (Imports, Exports, and Bye-products Regulations 2003), last year. It requires
importers to obtain a certificate of registration from KSB.
This again amounts to a non-tariff barrier against the
ideals of the Comesa treaty. KSB has used these regulations to cancel certificates of
registration of seven sugar importers. And importers can only trade freely as long as KSB
is happy with them.
KSB also threatens firms that have not renewed their
registration.
On March 1, 2004, Finance Minister David Mwiraria published
a Legal Notice No 12, allowing importation of sugar from Comesa, up to a maximum of
200,000 tons. The minister informed the public of the extended safeguard under the Comesa
Treaty. However, KSB advertised in local newspapers that it would restrict, distribute and
control the allowed quota thereby interfering with the spirit of free trade as envisaged
by Comesa. The original safeguard for 2003 did not have any conditions attached, and it
worked well. The new measure has been interfered with, contrary to article 61 of the
Comesa protocol.
KSB went further to publish a gazette notice on March 19,
2004, to further its illegal control of the allowed quota.
The Ministry of Agriculture and KSB received applications
from over 70 importers, but gave quotas to only 18. Quotas have led to many briefcase
importers applying, and then selling their allocations to genuine sugar importers.
The KSB allocated quotas to politically correct companies
without due regard to the Comesa spirit of free trade.
These illegal actions will sever contractual obligations
that Kenyan sugar importers may have with exporters from Comesa. If a firm is not given a
quota, it will cancel contracts with its suppliers.
Sugar prices have risen from Sh48 to Sh76 during the last
two weeks without justification from the authorities. The interests of 33 million Kenyans
should prevail.
* The writer is a former Kanu Chief Whip in the Eighth
Parliament.
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