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December 08, 2011

Kenya retains COMESA import quota on tax free sugar

The government of Kenya has received permission from COMESA to maintain in place the country’s current sugar safeguard measures for a further 2 years. However this has been made conditional upon an intensification of efforts to privatise and modernise the sugar sector, which has been making only slow progress since the initial activation of safeguard arrangements.

The Kenyan government has recently ‘published new laws allowing strategic investors to take up at least a 51 per cent stake in the five government run sugar companies that are scheduled for sale’, and a government spokesperson maintains that the privatisation process could be completed within 6 months. However, bottle-necks related to parliamentary procedures could delay progress.

Press reports noted that the conditionalities agreed by the COMESA Council were similar to earlier conditionalities linked to the previous extension of the safeguard measures.

Efforts are also under way to both improve the sector’s productivity and diversify the product range. Sugar sector operators are being required to ‘deepen research on high sucrose and early maturing cane varieties, while the Kenya Sugar Board (KSB) and the Kenya Sugar Research Foundation (Kesref) should spearhead adoption of research findings by cane growers’.

Press reports also indicate that investment is under way at Mumias Sugars to produce both beverage-grade alcohol and ethanol alongside sugar.

In September, meanwhile, it was announced that Mauritian sugar company Omnicane is planning to invest US$180 million in a sugar plant in the coastal region of Kenya. The project is to include ‘the establishment of an 18-megawatt bagasse power facility and a 30,000-litre ethanol production plant’, and Omnicane’s investment ‘is expected to boost the sugar production in the country, which presently is dominated by Mumias Sugar’. This is reportedly ‘one of the biggest foreign direct investments in Kenyan agro industry’.

Omnicane is expected to use its experience of modernising the sugar sector in Mauritius in the Kenyan context. Sugar production is to make use of irrigated land, based on a ‘nucleus system’ which ‘allows for planning and steady supply of uniform quality cane’.


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