Presidents
Yoweri Museveni and John Magufuli have met over Tanzania’s decision to
impose a 25 per cent import duty on sugar manufactured in Uganda and
pointed
at Kenya as the source of the problem.
Yoweri Museveni and John Magufuli have met over Tanzania’s decision to
impose a 25 per cent import duty on sugar manufactured in Uganda and
pointed
at Kenya as the source of the problem.
Tanzania
has demanded a 25 per cent import duty from Kagera Sugar Ltd, which had
at the end of April entered into a contract to buy 5,000 tonnes of
sugar from
Kakira Sugar Works.
has demanded a 25 per cent import duty from Kagera Sugar Ltd, which had
at the end of April entered into a contract to buy 5,000 tonnes of
sugar from
Kakira Sugar Works.
The
first 600-tonne shipment of the sugar spent more than two months on
Lake Victoria, as Kagera Sugar Ltd tried to negotiate a zero rate import
duty, as is
guaranteed by the East African Community’s Common External Tariff (CET)
agreement, but this proposal was rejected by Tanzanian authorities.
first 600-tonne shipment of the sugar spent more than two months on
Lake Victoria, as Kagera Sugar Ltd tried to negotiate a zero rate import
duty, as is
guaranteed by the East African Community’s Common External Tariff (CET)
agreement, but this proposal was rejected by Tanzanian authorities.
As
a result of Tanzania’s refusal to follow the rules established by the
East Africac Community (EAC), Kagera Sugar Works asked on July 26 that
Kakira Sugar
Works take back its sugar.
a result of Tanzania’s refusal to follow the rules established by the
East Africac Community (EAC), Kagera Sugar Works asked on July 26 that
Kakira Sugar
Works take back its sugar.
“We
have incurred huge losses in terms of demurrage, blocking of funds etc.
and as discussed with you over the phone, we request you to collect the
sugar and
release the ship immediately so that we do not incur any further
losses,” reads a letter signed by Buddan Rao, the chief finance officer
at Kagera Sugar Works.
have incurred huge losses in terms of demurrage, blocking of funds etc.
and as discussed with you over the phone, we request you to collect the
sugar and
release the ship immediately so that we do not incur any further
losses,” reads a letter signed by Buddan Rao, the chief finance officer
at Kagera Sugar Works.
An
official at Kakira Sugar said Tanzania’s decision to block Ugandan
sugar appears to have been informed by competition for investors.
official at Kakira Sugar said Tanzania’s decision to block Ugandan
sugar appears to have been informed by competition for investors.
“Why
not come to Tanzania and build factories here?” is a phrase that an
official at Kakira Sugar Works says was commonly used by Tanzanian
officials during
the negotiations to have the import duty reduced.
not come to Tanzania and build factories here?” is a phrase that an
official at Kakira Sugar Works says was commonly used by Tanzanian
officials during
the negotiations to have the import duty reduced.
But
Julius Onen, Permanent Secretary in Uganda’s Ministry of Trade,
Industry and Co-operatives, who did not attend the meeting, but is privy
to its proceedings,
says it emerged during the meeting, between the two presidents that
Kenya had last year imported large amounts of sugar because of
overwhelming domestic demand.
Julius Onen, Permanent Secretary in Uganda’s Ministry of Trade,
Industry and Co-operatives, who did not attend the meeting, but is privy
to its proceedings,
says it emerged during the meeting, between the two presidents that
Kenya had last year imported large amounts of sugar because of
overwhelming domestic demand.
The
sugar imported by Kenya, came in at a rate below the East African
Community CET. But this sugar is reported to have somehow found its way
into neighbouring
countries, leading to prices collapsing.
sugar imported by Kenya, came in at a rate below the East African
Community CET. But this sugar is reported to have somehow found its way
into neighbouring
countries, leading to prices collapsing.
Mr Onen says that it also emerged during the meeting that the Tanzanians
felt
that the sugar that was being imported into their country had been
imported by Kenya and then re-bagged in Kakira Sugar, which is why an
import duty of
25 per cent was demanded.
that the sugar that was being imported into their country had been
imported by Kenya and then re-bagged in Kakira Sugar, which is why an
import duty of
25 per cent was demanded.
Kenneth Barungi, Kakira Sugar’s deputy general manager, however, dismissed the accusation by Tanzania.
A
similar accusation that Uganda was importing sugar and then re-bagging
fuelled Kenya’s non-tariff barriers for years between 2011 and 2015.
similar accusation that Uganda was importing sugar and then re-bagging
fuelled Kenya’s non-tariff barriers for years between 2011 and 2015.
Uganda
had in 2011 sought an exemption from the 100 per cent East African
Community CET on sugar. Following that exemption, even in 2014, Kenya
was blocking
Ugandan sugar, saying it had been imported below the EAC CET of 100 per
cent.
had in 2011 sought an exemption from the 100 per cent East African
Community CET on sugar. Following that exemption, even in 2014, Kenya
was blocking
Ugandan sugar, saying it had been imported below the EAC CET of 100 per
cent.
This
was resolved after three Kenyan delegations visited Uganda’s major
sugar manufacturers; Kakira Sugar Works Ltd, Sugar Corporation of Uganda
Ltd and Kinyara
Sugar Works.
was resolved after three Kenyan delegations visited Uganda’s major
sugar manufacturers; Kakira Sugar Works Ltd, Sugar Corporation of Uganda
Ltd and Kinyara
Sugar Works.
Since
Kenya visited the sugar manufacturers, Mr Barungi says that the Kenyan
traders buying Kakira sugar have only experienced sporadic non-tariff
barriers but
they are not as routine as was the case before.
Kenya visited the sugar manufacturers, Mr Barungi says that the Kenyan
traders buying Kakira sugar have only experienced sporadic non-tariff
barriers but
they are not as routine as was the case before.
Kenyan
institutions including Customs and the police are also reported to be
targeting the smaller Ugandan sugar manufacturers that recently entered
the market.
institutions including Customs and the police are also reported to be
targeting the smaller Ugandan sugar manufacturers that recently entered
the market.
To
stop sugar from Kenya, which seeks the most number of exemptions and,
according to the two presidents, dumps it into the EAC, a decision has
been taken that
Uganda and Tanzania demand that the EAC CET on sugar be increased from
100 per cent to 150 per cent.
stop sugar from Kenya, which seeks the most number of exemptions and,
according to the two presidents, dumps it into the EAC, a decision has
been taken that
Uganda and Tanzania demand that the EAC CET on sugar be increased from
100 per cent to 150 per cent.
Mr
Onen says that the discussion was that sugar, which is on the EAC’s
list of sensitive products must be protected by imposing a high import
duty.
Onen says that the discussion was that sugar, which is on the EAC’s
list of sensitive products must be protected by imposing a high import
duty.
“Sugar
is one of the commodities on the sensitive products list. This means
that the country and even the EAC region in general has the potential to
produce
sufficient sugar for ourselves and for export. Any imported sugar
should attract a levy of even up to 150 per cent,” Mr Onen said.
is one of the commodities on the sensitive products list. This means
that the country and even the EAC region in general has the potential to
produce
sufficient sugar for ourselves and for export. Any imported sugar
should attract a levy of even up to 150 per cent,” Mr Onen said.
The
EAC has been struggling with implementation of the 100 per cent CET.
When Richard Sezibera was EAC secretary general, he suggested that
sugar, rice and cement
be removed from the sensitive commodities list, since all partner
states were routinely seeking implementation exemptions.
EAC has been struggling with implementation of the 100 per cent CET.
When Richard Sezibera was EAC secretary general, he suggested that
sugar, rice and cement
be removed from the sensitive commodities list, since all partner
states were routinely seeking implementation exemptions.
These exemptions would then be used as an excuse to introduce non-tariff barriers, affecting the EAC’s integration agenda.
The
two presidents also want any country seeking an exemption from the CET
to measure the demand shortage they have and then give manufacturers
from the EAC
first priority.
two presidents also want any country seeking an exemption from the CET
to measure the demand shortage they have and then give manufacturers
from the EAC
first priority.
After the EAC manufacturers have supplied all of their sugar, the balance can be imported.
But
the recurring sugar crises in East Africa are not just about the CET.
They routinely involve bouts of shortage followed by the affected EAC
country seeking
an exemption to import sugar below the CET rate, after which a round of
tariff and non-tariff barriers is initiated.
the recurring sugar crises in East Africa are not just about the CET.
They routinely involve bouts of shortage followed by the affected EAC
country seeking
an exemption to import sugar below the CET rate, after which a round of
tariff and non-tariff barriers is initiated.
And
the cycle begins again. As one Kenyan Customs official at the Malaba
border, who found himself being dressed down by Uganda Minister of
Finance, Matia Kasaija
over Kenya’s introduction of non-tariff barriers against Ugandan sugar,
later told The EastAfrican that his hands were tied since the order
came from President Uhuru Kenyatta.
the cycle begins again. As one Kenyan Customs official at the Malaba
border, who found himself being dressed down by Uganda Minister of
Finance, Matia Kasaija
over Kenya’s introduction of non-tariff barriers against Ugandan sugar,
later told The EastAfrican that his hands were tied since the order
came from President Uhuru Kenyatta.
Sugar surpluses and shortages in East Africa in 2017:
•Uganda had a surplus of 100,000 tonnes
•Kenya had a shortage of 543,000 tonnes
•Tanzania had a shortage of 200,000 tonnes
•Rwanda had a shortage of 70,000 tonnes
