Uhuru's Deal on Uganda Sugar Imports Puts Mumias on a Difficult Spot

Uhuru Kenyatta's visit to Uganda saw a deal struck allowing cheaper Ugandan sugar into the Kenyan market. This however, appears as a backtrack on the Jubilee's adminstration's effort to protect the kenyan sugar millers when they passed a decision to maintain the ban on imports.

During the release of its 2014 results,Mumias Sugar blamed its losses majorly to cheap sugar imports and the national treasury hence put measures during the reading of the budget this year so as to protect the sugar industry in kenya.

Dumping of sugar

Uganda’s sugar is on average Sh30 cheaper per kilogramme compared to Kenya’s according to the USMA.Kenyan officials thereafter raised the red flag over increased dumping of sugar from Uganda into its domestic market for which the 100 per cent import duty had not been paid.

Under the EAC Common External Tariff (CET) structure, sugar attracts duty of 100 per cent, a factor that makes imports outside the trading bloc expensive.

Sugar millers especially Mumias are in a similarly difficult spot. Aging factories and a high concentration of mills in particular regions have led to widespread maintenance shutdowns and fierce competition for sugar stock.GOK bailed out kenya's biggest miller, Mumias Sugar to a tune of Kenya Shillings 1 billion inorder to revive the ailing Miller.

With the Kenya-Uganda deal signed to allow Ugandan sugar into the Kenyan Market, Kenya’s sugar growers and millers could find themselves in deep distress.