Kenya gets another COMESA extension on sugar imports

An establishment of South Nyanza (Sony) Sugar Company. The company together with Nzoia Sugar Company in Western Kenya are hosting pilot projects on sucrose-based payment to cane farmers where Kenya Sugar Research Foundation (KESREF) are taking lead role. The system is expected to undergo tests before it is implemented. (PHOTO: COURTESY)

The Government has been handed two more years to sort out its sugar mess. With this, Kenya is buying time to enable it privatise its struggling sugar millers before the Common Market for Eastern and Southern Africa (COMESA) safeguards are lifted.

The Industrialisation and Trade ministry told The Standard yesterday that Kenya had received the extension after fruitful negotiations in Madagascar during the 36th Comesa Intergovernmental committee meeting. “I have just received information from my team there that we have gotten an extension of two years before the Comesa safeguards are lifted,” Trade Permanent Secretary Chris Kiptoo said.

This was also confirmed by Kenya’s Ambassador to Zambia Sophie Kombe. “We have managed to get a two-year Sugar safeguard extension to take effect after the current one expiring in February 2017,” Ms Kombe said. She said this will guard sugar imports into the Kenyan market thus protecting farmers.

The country has been unable to prepare its local sugar industry to compete against the sweetener from COMESA markets, thus asking for protection for almost a decade. In March last year, the Council of Ministers sitting in Addis Ababa, Ethiopia, extended Kenya’s sugar safeguard by one year subject to review and renewal for another year.

Failed to comply

The Government then managed to secure approval for the additional safeguard year up to February 2017, from the Comesa council of ministers at a meeting held in Lusaka, Zambia.

The common market requires Kenya to revert to quotas, which will eventually be phased out, allowing for a free market that will see cheap regional sugar enter the market. The country has, however, failed to privatise Chemelil Sugar Company, South Nyanza Sugar Company, Nzoia Sugar Company, Miwani Sugar Company (in receivership), and Muhoroni Sugar Company (in receivership) that was part of the terms for keeping the safeguards in place.

Kisumu Senator Peter Anyang’ Nyong’o and Gem MP Jakoyo Midiwo filed a petition at the High Court seeking court orders to block plans to privatise the five companies, saying the Privatisation Commission has failed to comply with the law.

The Government plans to sell 51 per cent stake in the five millers to strategic investors and while another 24 per cent will be set aside for farmers and employees. It will then sell a remaining 25 per cent stake in the milling companies in an initial public offering once the factories are profitable.

Governors have also opposed the move, asking Treasury to clear over Sh50 billion in debts accumulated by State-owned sugar companies and hand them over to counties to be managed by them since agriculture is devolved.

The Government has already invited investors to bid for a stake in five sugar companies earmarked for privatisation in reforms aimed at turning around the fortunes of the ailing sector.