This archive report was first published on 22 July 2019.
Kenya's sugar industry has been plagued by policy and public mismanagement, leading to a significant decline in productivity. The industry's natural advantages have been undermined, and it will be undercut by cheaper imported sugar when import protection ends next year.
With over a quarter of a million farmers growing sugarcane and six million Kenyans relying on the industry for their livelihood, the nation saves Sh40-55 billion annually in import costs by using locally produced sugar.
However, the government's attempt to remedy the decline in the industry through new regulations has been met with criticism. The regulations, which include zoning and requirements for high-powered management teams, are seen as unjustified and inexplicable.
The Common Market for Eastern and Southern Africa (Comesa) has warned that there will be no further extensions in protecting domestic sugar production from imports. Kenya's sugar production costs $870 (Sh87,000) per tonne, compared to $350 in Malawi and $400 in Egypt.
The proposed controls are an old-fashioned model of state intervention that will further load costs and prevent key corrections that can reduce production costs. The starting point for Kenya's excessive costs is seeds, with farmers still using old-fashioned, low-yield seeds.
A clear jump-start would have come from regulations that encouraged entrepreneurs to produce high-yield seeds developed by the Sugar Research Institute (SRI). Instead, the regulations take sugarcane seed production away from the Kenya Plant Health Inspectorate Service (Kephis) and puts it under the Sugar Directorate.
Setting up a department in the directorate with the requisite technical capacity, expertise, and infrastructure will be costly and time-consuming, promising delays and disruptions.
The mismanagement and inefficiency of our sugar mills are another major issue. Egypt produces nearly five times the sugar that Kenya does, despite having fewer factories. The regulations add a framework that is proven to deter farmers and create disincentives to millers.
They introduce zoning, which has driven farmers out of production in other countries. The new rules also require investors to have high-powered management teams up to two years before getting licenses or going into operation and build sugar mills ahead of licensing.
These regulations are illegal, breaching the Constitution and other laws, and did not undergo the required impact assessment. The Parliamentary Committee on Delegated Legislation is due to review this decision.
The six million Kenyans who rely on the industry hope for a more serious attempt at cutting sugar production costs.
— Mr Arum is the co-ordinator, Sugar Campaign for Kenyan cane growers (Sucam)
