Kenya is reluctant to seek extension of safeguards that protect the country from importation of cheap sugar from the Common Market for Eastern and Southern Africa (Comesa).
The EastAfrican has learnt that with only seven months to the expiry of the safeguards, Kenya has realised that having lobbied for an extension twice in the past, securing another could be a tall order and that the country cannot peg the survival of the sugar industry on protection from competition.
"Kenya has not applied for an extension of the safeguards. If it will to do so, it must present the request at the meeting of the Comesa Trade and Customs Committee, which brings together technical experts from all member states," Mwangi Gakunga of the Comesa secretariat told The EastAfrican.
The safeguards allow Kenya to limit duty-free imports from Comesa countries to a maximum of 350,000 metric tonnes annually because the country is unable to compete with other member states on a duty-free quota free terms.
The government has, therefore, resolved to lease the factories hoping to turnaround the companies, which have collapsed under the weight of years of mismanagement, corruption and influx of cheap imports.
The Agriculture and Food Authority (AFA) is looking for investors to enter into long-term leases for Chemilil, Nzoia and South Nyanza sugar companies alongside Miwani and Muhoroni sugar companies, both of which are under receivership.
"The objective is to facilitate turnaround of these companies to profitability through modernisation and efficient management, which will in turn enhance competitiveness in Kenya, the East African Community, Comesa and the global sugar market," said Anthony Muriithi, AFA director general in a public statement.
To make the factories attractive to investors, the government has restructured their balance sheets including writing off massive debts, tax waivers and penalties amounting to a staggering $572.5 million.
The leasing of the companies, which the government argues is a form of privatisation, comes after the country banned the importation of raw cane and brown sugar -- the latter has rendered local mills uncompetitive due to a significant surge in imports from Uganda.
Early this month, Agriculture Cabinet Secretary Peter Munya said that unscrupulous businessmen and traders were taking advantage of the Covid-19 curfew to smuggle raw cane and brown sugar into the country through the Busia border.
Also, millers who had also obtained temporary permits to import raw cane from Uganda from September to December last year, were also illegally still importing the raw cane.
"The country may soon be faced with a sugar glut occasioned by this increased importation and an eventual collapse of the industry," said Mr Munya in press statement on July 2.
In its report, the Sugar Task Force recommended among other, establishment of production zones for particular mills and merging of some underperforming ones to attract investors.
Dr Emmanuel Manyasa, economist and country manager Twaweza East Africa, said that leasing is just a "painkiller" for an industry faced with high production costs, uneconomic dependence on smallscale farmers and whose fortunes are bound to be hit by the expiry of the Comesa safeguards.
"Privatisation failed because investors know the industry is controlled by sugar barons and they cannot make money. Even leasing is not sustainable until we deal with the cartels," he told The EastAfrican.
Kenya's sugar production cost is estimated at more than $600 per metric tonne, twice that of other key sugar-producing Comesa countries, making the country an attractive export market.
According to Dr Manyasa, Kenya might fail to seek for an extension considering that Article 61 of the Comesa treaty stipulates the country must proof it has taken the necessary and reasonable steps to overcome or correct the imbalances for which safeguard measures are being applied.
"Removal of the Comesa safeguards will kill the industry totally," said Dr Manyasa.
Source: allafrica.com

Blantyre — Minister of Information, Gospel Kadzako has advised Malawi Communications Regulatory Authority (MACRA) to seriously engage mobile telecommunications companies to reduce the cost of internet data to enable more Malawians enjoy services in the communication sector.
The minister said this on Monday when he toured Malawi Communications Regulatory Authority Offices in Blantyre.
Kadzako said Information Communication Technology (ICT) is deemed to be catalyst of any economy because people use internet data to access services to contribute positively to all spheres of development.
"However, right now, to own a smart phone is like a crime because of the cost of data. Here in Malawi, Internet data is being sold at 80 cent per second and expire within the specified time usage yet in our neighboring country, Tanzania the cost of data is as less as 4 cent per second.
"In view of this, Malawians feel like they are being skinned alive and they are much worried with the development because it is the mobile companies that are celebrating for making huge profits," he said.
The minister therefore urged Malawi Communication Regulatory Authority to quickly and seriously engage the mobile communications companies to address the problem for the enjoyment of Malawians.
He added: "Should we say that we are experiencing this problem because we only have three mobile telecommunications companies in Malawi? If yes, let us engage more players because we want Malawians to enjoy ICT services without any hindrance.
"This is the new government and people are expecting to see things being done differently."
Meanwhile, the minister has challenged to conduct structural and functional review in the operation of MACRA as one way of sanitizing the institution to serve Malawians better.
"We have seen funds from this public institution being used by political parties to serve their interests. How come MACRA can use K1billion per month for its operation?
"In addition, the institution has some people who were employed because of the political party they belong to and they have not any qualification or their papers do not match with the position they hold. As such, this new government will replace these irreconcilable individuals with those who are professionals," challenged Kadzako saying: "this is not witch-hunting but dealing with the problem in a different way."
In his remarks, MACRA Director General, Henry Shamu thanked the minister for paying a courtesy call to the institution.
He then concurred with the Minister on the expensiveness of internet data assuring him to engage mobile telecommunications companies soon to amicably address Malawians concerns.
Source: Malawi News Agency

Africa should open markets, diversify supply and strengthen regional value chains to become a competitive provider of certain health-related products, a new ITC report finds.
Africa can position itself strategically and develop a regional response to avoid healthcare product shortages similar to those triggered by the COVID-19 crisis. That's the main message of Medical Industries in Africa: A Regional Response to Supply Shortages, a new International Trade Centre (ITC) report.
COVID-19 severely burdened the global health system, driving a surge in demand for medical supplies such as masks, gowns and gloves. The World Health Organization warned in early March that international production of such goods would have to ramp up by 40% to meet demand.
Today, Africa sources only 8% of its health-related products from African suppliers. The continent can become competitive in some of these items while combating the crisis and building its own resilience to future pandemics, the ITC report finds. The African Continental Free Trade Agreement has a key role to play in supporting the regional medical industry, it adds.
'We examine the potential of the African medical supply industry and show how trade can be an important element of the continent's health response, both in the short and long term,' says Dorothy Tembo, ITC Executive Director a.i. 'We suggest a strategic mix of open markets, diversified procurement and stronger regional value chains' to position Africa strategically in the future trade landscape of the global medical industry while safeguarding the health of Africans.
Keeping the regional market open for essential health products is critical, the report says. ITC business surveys on non-tariff measures have found that companies in Africa frequently struggle to import medical supplies because of inspections and customs charges. In addition, tariffs are relatively high: African countries apply a 10.3% average tariff on these items, compared with 7.9% in non-African developing economies and 2.9% in developed countries.
African governments should review import regulations and consider temporarily lifting tariffs, taxes and other restrictions that hinder access to these goods - especially as the continent has limited sources of such products.
Regional value chains would help diversify global supply
That's why it's also important to diversify suppliers, the report notes. Africa provides just 8% of its own medical products, importing most of the rest from the European Union, China and India.
The report urges policymakers to consider regional suppliers with export growth potential. Diversifying would reduce the impact of export restrictions on essential goods and make the continent less dependent on just a handful of foreign suppliers. Egypt, Ghana and South Africa are viable alternatives for products such as disinfectants and adhesive bandages.
Governments also should help build up Africa's capacity to produce key medical supplies by developing regional value chains, the report says. Although the continent produces many of the inputs used to manufacture health-related products - such as rubber, fabrics and ethanol - these goods are often exported without any transformation.
Policymakers could support the development of regional value chains by channeling investments into these sectors, the report says. Furthermore, they could leverage negotiations in the context of the African Continental Free Trade Agreement to keep trade functioning smoothly along these value chains - for instance, making sure that these vital goods trade duty-free within Africa and that other regulations are harmonized.
Source: allafrica.com