Launch of regional customs unions spells doom for local sugar

Published on 08/06/2009

By Gakuu Mathenge

The launch of the Common Market for Eastern and Southern Africa (Comesa) Customs in Zimbabwe marks the beginning of hard times for Kenya’s sugar farming and its six million dependants.

President Mugabe took over Comesa chairmanship from President Kibaki at the 13th Heads of State and Government Summit in Zimbabwe last week.

President Kibaki’s term comes to an end when consultations are underway to harmonise Comesa, East African Community and Southern African Development Community into a single bloc.

“The process will begin with the establishment of a free trade area arrangement covering all the three regional communities,” said President Kibaki. Over the last seven years, intra-Comesa trade reached the $15 billion (Sh1 trillion) mark last year, from $3.2 billion (Sh249 billion) in 2001, when the Comesa Free Trade area was included.

“There is greater potential for promotion of intra-Comesa trade if we maintain peace and security in the region,” he said.

Kenya is on its third year of a four-year moratorium extension granted by Comesa in 2007 to allow the country prepare the industry for competition from the region.

The protection — a 120 per cent duty of sugar imports — expires in December 2012. Little progress has been achieved after seven years of Kibaki’s rule and promises to turn around the agricultural sector to prepare it for looming competition from the Comesa region.

heavy price

With the removal of sugar protection coinciding with an election year, politicians may pay a heavy price for ignoring a sensitive sector that supports a huge pool of vote basket.

Options are few and shrinking. In about 24 months, Comesa zero tariff sugar will hit the streets at half the price of Kenyan sugar.

Farmers will lose billions of shillings in income, and factories will grind to a halt.

Even when the Government says privatisation has just kicked off, the stark reality is in slightly over 24 months. The country will be plunged into 2012 succession electioneering campaigns, and very little Government work goes on in an election year.

Kenyan sugar is twice as expensive (at Sh80 a kg) as sugar from Comesa countries especially Sudan, Malawi and Swaziland, due to high cost of farm inputs, over-employment, inefficiency from rotting and old machinery that operate half their capacity, wastage at the farms, corruption and mismanagement.

Experts say Kenyan sugar consumers pay more than Sh40 billion more than they should, and sugar farmers were only propped up by the high duty charged on imports (at 120 per cent) that kept factories from collapsing.

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