Kenya, the east African economic giant, seeks to extend sugar safeguards, which ends on February 28, an action aimed to reduce imports due to threats to its domestic industry, Business News has learnt.
Illovo Sugar (Malawi) Limited, the Malawi Stock Exchange (MSE)-listed sugar producer, has said the Kenyan market, which is part of Comesa trade bloc where the country exports about 56 000 tonnes of the sweetener annually, is significant.
Sugar is one of Malawi’s critical export commodities after tobacco and tea.
The safeguards for Common Market for Eastern and Southern Africa (Comesa), a 19-member trade bloc, allows Kenya to maintain a 350 000-tonne ceiling on duty-free sugar imports from within the region, which includes low-cost sugar producers, including Zambia and Malawi.
Illovo Sugar (Malawi) Limited public relations officer Irene Phalula, responding to an e-mailed questionnaire last week, said the Kenyan sugar market, which is part of Comesa is important to Malawi as a regional market, which also includes Zimbabwe, Uganda, the Democratic Republic of Congo (DRC), Burundi, Rwanda and South Africa, as the sugar producer moves away from the European Union (EU) market.
“All African sugar markets are of benefit to Malawi. However, due to transport costs, those which are in close proximity and are in deficit are the most important to us, including Tanzania, Kenya, Rwanda and Burundi,” she said.
Phalula said the once lucrative EU market is no longer preferred because of the unprecedented low prices, forcing the country to rely more on the African markets.
Media reports indicate that after extending the sugar safeguards for one year in 2014, Kenya is seeking another extension of Comesa safeguards on sugar as the current ones expire on February 28, potentially exposing local producers to an influx of cheaper imports.
The Star of Kenya earlier quoted the head of the Sugar Directorate, Rosemary Mkok, having said that the State is engaging with key decision makers, including Comesa governing council to see if it can secure the third extension.
Kenya’s sugar sector is ailing, with millers faced with issues of cane supply shortage due to varieties that take long to mature and are rain-fed, rampant cane poaching and general mismanagement.
