Kenya gets more time in sugar import safeguards

Agriculture Cabinet Secretary Felix Koskei is shown the seedlings of improved sugarcane by Head of Technology Transfer at Sugar Research Institute in Kisumu James Odenya, when he visited the facility recently. [PHOTO: TITUS MUNALA/STANDARD]

Sugarcane farmers have been handed a lifeline by the Common Markets of East and Southern Africa countries (Comesa), after agreeing to extend protectionist measures aimed at shielding the sugar sector from cheaper imports.

Trade ministers from Comesa on Thursday approved a one-year extension on sugar import safeguards , following pleas by Kenya. It is the sixth extension that Kenya has won.

The country hoped, among other measures, that privatising the State-owned sugar millers will improve on operational efficiencies. While privatisation of the millers remains incomplete, the ministers said the extensions granted have enabled the entry of new private players such as West Kenya.

“The study found that the safeguards had made it possible for new investors to enter the Kenyan sugar sector,” the ministers said in a statement issued late Thursday. “It was noted that without the safeguard, it would have been difficult for these investors to enter a market that was flooded with cheap sugar imports.”

The ministers are meeting in the Ethiopian capital, Addis Ababa. In the 15 years that Kenya’s sugar sector has been shielded from external competition, the Council of Ministers noted that about 70 per cent of the sugar industry is controlled by the private sector – compared to only 33 per cent in 2004. “It was noted that if the new entrants were given sufficient protection for some time, they would stabilise and significantly improve the competitiveness of the sugar industry in Kenya.”

Kenya has been apprehensive, especially in its latest appeal to Comesa for the extension of the import safeguards, owing to the possible damage that opening up the market to cheap import could cause.

Exhaustible limits

That was particularly of concern because Kenya had also exhausted allowable limits for safeguards, as proscribed in international trade guidelines.

Now, the ministers hope that Kenya could, in the next 12 months, complete the privatisation of State owned mills and shift to growing early-maturing and high sucrose content sugarcane varieties.

It is projected that paying farmers based on the sucrose content instead of weight, will push them away from the current sugarcane varieties. For now, priorities lie with the State divestiture of five companies including Sony, Muhoroni and Nzoia – which are all struggling.

Privatisation Commission Chief Executive Officer Solomon Kitungu, told The Standard on Saturday that Parliament’s input was delaying the proposed divestiture. “Parliamentary approval is required under the Privatisation Act,” Mr Kitungu said.

He said the restructuring of firms approved by the Cabinet will ensure factories become financially viable and self-sustaining after privatisation. Parliament failed to pass a motion in December to ease privatisation of five sugar companies even after the committee’s approval.