The cost of sugar in Kenya may soon drop as the country prepares to receive its first consignment of duty-free sugar imports.
The shipments are expected to arrive at the port of Mombasa in the coming days, with the first vessel, San Nicolas, carrying 21,000 tonnes of sugar from Thailand, scheduled to arrive on Tuesday. A second ship, Sheng Heng Hai, is expected to dock on Wednesday, although the volume of sugar it is carrying has not been disclosed.
Normally, imports of sugar would attract a duty of 50 percent, but the Kenyan government opened an import window in December that would allow traders to ship in 100,000 tonnes of sugar duty-free from outside the Common Market for Eastern and Southern Africa (Comesa) region to curb an imminent shortage in the country.
The government has also allowed the Kenya National Trading Corporation (KNTC) to import a further 200,000 tonnes of sugar duty-free. This means that by the end of the year, Kenya is expected to have imported at least 300,000 tonnes of sugar from outside the Comesa regional bloc.
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The move comes as Kenya seeks to address the high cost of living in the country by scaling up imports of other essential commodities duty-free. The state has disclosed plans to import large quantities of rice, cooking oil, wheat, and beans duty-free through KNTC, eliminating the tax which ranges from 30 percent to 50 percent on these goods.
According to documents seen by The Kenya Times, KNTC will import rice amounting to 150,000 tonnes, cooking fat/oil (125,000 tonnes), sugar (200,000 tonnes), wheat (25,000 tonnes), and beans (80,000 tonnes).
While the move may be welcome news for consumers, it has caused disquiet among manufacturers and food processors, who are yet to determine how they will fit into the state’s intervention in the supply chain. They fear that the influx of duty-free imports could hurt local producers and manufacturers, who will be unable to compete with the lower-priced imported goods.
Kenya relies heavily on imported sugar to meet its annual deficit, which has now grown to one million against production of 800,000 tonnes annually. Last year, traders struggled to ship in the quota that the country was to import from the Comesa region, bringing in only 115,000 tonnes against the required 180,000 tonnes by the end of November.
The Comesa countries, where Kenya is allowed to import the commodity from, are selling their produce to other global regions, especially the European Union, where prices are higher by at least $20 per tonne compared to within the region.
The duty-free imports of sugar and other essential commodities come at a time when Kenya is facing rising inflation, which hit a 12-month high of 6.61 percent in December 2021, driven mainly by the high cost of food and fuel. Inflation has continued to rise, with the Central Bank of Kenya projecting that it will peak at 7.5 percent in the first quarter of 2022 before easing later in the year.