The political war between the government and the Opposition has had many shifting fronts. At one time it was insecurity, it shifted to corruption and now to the sugar sector. To some Kenyans, politics has become harmless entertainment.
To others and I suspect a growing number, politics is too much and boring; it is sucking up lots of national energy.
What has happened to the other fronts? The insecurity front has not had much activity and we hope it will remain so. It got a big boost from Obama visit. The corruption front is still being contested. The two fronts are likely to remain engaged and could define the 2017 polls. One wonders in whispers why the Opposition sets agendas for national discourses and not the government...
Where does sugar come in?
It is not clear to me and may be to others why the government side is often caught flatfooted by the Opposition.
While the government intention might have been noble in the spirit of the East African community, with convincing data that Kenya enjoys a trade surplus with Uganda, someone forgot the political angle to the deal if there was any deal. The report on sugar deal, galvanised western Kenya leaders against the government only months after they got a bail out for Mumias sugar. Raila must be smiling...
Now the government is in catch 22. It can deny that there was no deal, but people are more likely to believe ODM because they voted for it in that region. Kenyans by our nature tend to distrust government.
If the deal is there it will be hard to defend, no matter how much economic sense it makes. What is curious is that Uganda has not waded into the exchange between the government and the ODM, read Opposition.
By championing the interests of the farmers, ODM will score lots of political points. Farmers do not care about the deals between governments, all they want is money in their pockets. The tiff is likely to awaken the ghosts that are hidden within the sugar industry, the life line of most of western Kenya. There is no doubt that the Opposition will extract maximum political capital from this deal if there was any deal. If the government publicises the deal, you will hear it has been doctored.
The matters were not made any better when the president replied to Raila’s allegation. The media and Kenyans love a contest between Raila and Uhuru. The Opposition and no one is saying this loudly may not have been very happy with the jibes the president threw at them from Uganda , and the sugar deal or no deal gave them the ammunition they needed to hit back.
Let’s get through the political fog and ask what the issues are in sugar sector? There is a belief that sugar funds Kenya politics. Find out the other sources. Some observers have noted that around election time, the price of sugar mysteriously goes up. Expect in coming days to hear more about sugar barons. My hunch tells me they are unlikely to be named even under the current heated politics on sugar. Guess why...
Data shows that Kenya has a sugar deficit of about 200,000 metric tons, which necessities importation. The shortage is caused by low productivity, about half Zambia’s, rain dependency and shrinking plot sizes. In extending sugar safeguard to Kenya last year, Comesa noted the need to privatise state owned mills, conduct further research into new early maturing and high sucrose content sugarcane varieties and adopt them and pay farmers on the basis of sucrose content instead of weight.
Things get even sweeter in this industry. A World Bank blog authored by Wolfgang Fengler and Fred Owegi notes that sugar prices in Kenya are higher than the world average, which create lucrative opportunities for contraband sugar. Could importing sugar from Uganda be targeting this trade particularly from Somali, and security implication? Is this the angle we are missing out?
Peter Wanyande article published in 2001, “Management Politics in Kenya’s Sugar Industry: Towards an Effective Framework” highlights some of the problems facing the sugar sector, he wrote, “Poor management, corruption and vested political interests have made Kenya’s sugar industry so inefficient that the country’s goal of attaining self-sufficiency in sugar production will remain unattainable for a long time.” That remains to this day.
Writing in 2012, Wolfgang and Owegi concurs with him, with reference to sugar factories, they put it clearly “But the quality of management is mixed, which is holding the sector back.” Recalling a former CEO at Mumias leaves one wondering if there are no serious managers in Kenya. It could also be an indicator why the sector is ailing, we have no faith in our own people.
Could there be too many sugar factories in Kenya which denies them economies of scale? There are about 10 sugar factories in Kenya, both private and parastatals. Devolution could create demands for “own” sugar factories in counties, just like ‘own” universities. This will make the new factories more uneconomical.
Add the fact that globally, 70 per cent of the sugar that is produced is consumed in the same country and only 30 per cent is exported, meaning that sugar production is likely to remain a local issues. ODM seems to know that very well.
Where do we go from here?
Sugar will remain a political tool as long as we have a shortage and imports are necessary. It is unlikely that the government will keep off from this sector soon. Privatisation of the sugar firms could be the way out, but even privatised firms are making losses.
The alternative would be to let the sugar firms compete until shake out when we get the best managed and efficient firms.
But the political costs for this would be too high. An estimated 25 per cent of the country’s population depends directly or indirectly on the sugar industry for their livelihood (Food and Agriculture Organisation). Politicians would see that as 25 per cent of votes. Imagine all the parastatal sugar firms collapsing in the western sugar belt. Not forgetting that we used to grow sugar along the coast. Remember Ramisi and now Kwale International sugar company which is about to start producing sugar?
It is unlikely that the government will let the invisible hand of the market work in this sector soon. It would prefer its visible hand and the visible political dividends.
The writer is senior lecturer, University of Nairobi School of Business
