Kenya’s sugar imports bill hits Sh24bn on low output
Trucks at the port of Mombasa waiting to be loaded with bags of imported sugar in this file photo.
The value of Kenya’s sugar imports hit Sh23.92 billion last year, a newly published document by the Agriculture Ministry shows, a pointer to the lucrative production investment opportunities in the domestic market.
The country remains a net importer of sugar, mainly from the Common Market for Eastern and Southern Africa (Comesa), despite having the potential to produce and meet her domestic consumption and surplus for export.
“The country continues to rely on imports to bridge the deficit. For instance, in 2022, sugar valued at Sh 23.923 billion was imported. This is a drain to the country’s foreign exchange” the Agriculture Ministry said in the newly published policy document which doesn’t provide the comparative value of imports in previous years.
The total sugar requirement in the country is estimated at 1.1 million tonnes annually, made up of 930,000 tonnes of table sugar and 170,000 tonnes of industrial-use sugar.
The industry has the potential of producing over 1.47 million tonnes of sugar which would meet the domestic demand and provide a sustained surplus for export to the Comesa region which is generally a net importing region.
“Due to industry inefficiencies, this capacity is currently underutilized,” the Agriculture ministry said.
Kenya relies 100 per cent on imports to meet its refined industrial white sugar requirements. Refined sugar imported from outside the Comesa region under the tightly regulated duty remission scheme as a raw material for manufacturing is gazetted under the East Africa Customs Management Act (2004) and subjected to VAT.
Tight regulations
The importation of industrial sugar under the EAC remission scheme is tightly regulated. As a precondition, every Kenyan manufacturer must be registered and maintain their registration as a manufacturer with the Sugar Directorate.
Similarly, every manufacturer, other than where that manufacturer only imports sugar from a Comesa Member State, must be gazetted under the EAC Customs Management Duty Remission Scheme.
Subject to the conditions above, the manufacturer will engage with a supplier and receive a pro-forma invoice with which to apply for an Import Declaration Form (IDF).
The manufacturer will then apply for pre-approval from the Sugar Directorate for every separate shipment of refined sugar, regardless of origin. The application shall declare the origin, volume, quality, and price.
The manufacturer, where the refined sugar originates from outside of Comesa, shall apply to The National Treasury for authority for every separate shipment of refined sugar. The application shall declare the origin, volume, quality, and price.
There are 16 sugar mills in the country with a total processing capacity of 51,450 tonnes of cane per day (TCD) but the capacity utilisation is about 56 per cent, according to projections by the Agriculture Ministry.
“The low utilisation is due to inadequate factory equipment maintenance, fluctuating supply of cane, and inappropriate processing technology. The mills with low sugar recoveries are operating old and inefficient machinery while the newly installed mills using modern and efficient processing technology post higher recoveries” it said.
A fresh round of multi-billion shilling investments is lined up for the sugar industry in Kenya as investors trooped in hoping to capitalise on a widening deficit in the production of the sweetener.
A review of the investment pipeline shows that more than Sh15 billion in fresh capital is targeted for the hobbling sugar industry towards greenfield projects as well as the expansion of some existing processing factories and cane farms.
The bulk of the greenfield sugar factory projects falls within Narok, Nandi, and Kericho counties—marking a noticeable shift from the traditional cane-growing zones in western Kenya such as Kisumu, Nyando, Mumias, Migori, Homa Bay, and Kakamega.
