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Tanzanian firm eyes Kilifi with a sugar manufacturing plant

By Otiato Guguyu | Published Wed, February 28th 2018 at 14:54, Updated February 28th 2018 at 15:01 GMT +3

KILIFI, KENYA: A Tanzanian company, Tembo Sugar millers has made applications to set up a factory in Kilifi which will be the second at the Kenyan Coast.

Director General of the Agriculture, Fisheries and Food Authority (AFFA) Alfred Busolo said they had received documents early this year by the company seeking an entry into the Kenyan market through Kilifi.

“Things are still at a preliminary stage because they have to confirm potential, do a feasibility study which might take time,” Mr Busolo said.

“You know there are no sugarcane plantations in Kilifi so we believe they will need to have done some consulations on production,” he said.

Kenya has 7 private sugar manufacturers including Kwale International Sugar Company Limited (KISCOL) which is located at the coastal belt.

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KISCOL was constructed between 2007 and 2015 at an estimated cost of $200 million (Sh20 billion).

Other privately owned millers include West Kenya Sugar, Kibos Sugar, Butali Sugar, Transmara Sugar, Sukari Industries and Kisii Sugar Factory.

Kenya’s state owned millers have been struggling even as the government plans to privatize the five ailing sugar millers — Chemelil, Muhoroni, Miwani, Nzoia and Sony.

The only listed government miller Mumias Sugar is in tatters even after several interventions and is now seeking Sh4 billion bailout to revive the factory and promote efficiency.

Most of the state owned sugar manufacturers are not ready for introduction of new competitive players even as the Common Market for Eastern and Southern Africa (Comesa) safeguards are set to expire next year opening floodgates to cheap sugar from region.

The protection from imports of the 19 member region has been in place since 2002 with Kenya requesting several extensions after it expired.

With the impending lifting of the ban, the industry is cornered given that they cannot utilize the remaining months to shore up revenues after the governemnt allowed the importation of 989,619 tonnes last year as compared with 334,109 tonnes in 2016.

Sugar imports increased by 196 per cent in 2017 compared with the previous year as traders rushed to ship in duty-free commodity to bridge a local deficit.

The Kenyan sugar industry also continues to grapple with sugar smuggling rackets that have been able to operate without significant clampdown by the state.