UGANDA: Sugar prices crumbling under weight of smuggled Kenyan sugar

Published: 02/13/2018, 5:28:18 PM

Uganda is grappling with smuggling of duty free sugar which has resulted to a drastic drop in sugar price on the Ugandan market, according to Uganda's Business Week. 

Appearing before parliament to respond allegations that government was reluctantly allowing importation of duty free sugar, the Ministry of Trade, Industry and Cooperatives, Amelia Kyambadde responded that: "We have confirmed with Uganda Revenue Authority that: There is no direct importation of duty free sugar, there is also no dumping of sugar in transit within the country, the above drastic drop in sugar price has been caused mainly by smuggling of duty free sugar from the Republic of Kenya,"

Kyambadde said the smuggling is mainly done by boda bodas through the porous borders and then re-bagged in branded bags of Kakira, Kinyara and Lugazi sugar making it difficult for URA to seize.

She said smuggling of duty free sugar has not only hurt the sugar industry but also the out growers of sugarcane whose livelihoods entirely depend on supply of sugarcane to the factories, it has affected electricity generation, and shall eventually affect other industries that depend on by-products of sugar cane such as distillers of spirits, other beverages, bakeries and animal feed industries.

"To bring this current situation under control, the government has agreed to: Undertake operations to curtail smuggling of sugar across our borders commencing this week, allow controlled export of sugar to the regional market. I am contacting my colleague from Tanzania to have 25,000 MT of sugar exported to Tanzania, I am also formally contacting my colleague from the Kenyan Government to express our concern to the flow of sugar from across our common bordersand we are also clamping down on illegal jaggeries which are poaching sugarcane especially in Bunyoro where over 20 are currently operating," Kyambadde said. 

She said URA operations seized over 55 tonnes of illicit sugar from July to December 2017.

Kyambadde said the sugar industry is one of the fastest growing industries in Uganda contributing over UGX290 billion (US$79.8 million) in taxes in 2016/17 and employing over 60,000 Ugandans directly and indirectly. The Industry produces over 100 MW of electricity from bagasse of which over 40MW is supplied to the national grid. However the taxes and the power generated have reduced of recent.

She said over the last 10 years, sugar production has been increasing by nearly 12% annually making Uganda the only sugar surplus producing country in East Africa. Kenya produced 327,000 tonnes against demand of over 800,000 tonnes in 2017; Tanzania had a shortage of over 200,000 tonnes and Rwanda a shortage of 70,000 tonnes.

She said currently, there are 30 licensed sugar mills in the country although only 11 are in operation while the rest are at different stages of development.

She however said that early last year, sugar prices hit a maximum of UGX8,500 per kilo in some parts of the Country. This was due to: Prolonged drought that stretched for a period of 9 months from early 2016, increased regional demand of Uganda's Sugar especially in Kenya and Rwanda and increased cost of sugar cane from UGX85,000 in 2016 to UGX175,000 in 2017.

Kyambadde however said this has since changed and prices were UGX190,000 per 50kg bag  in October to December 2017 and currently it is UGX138,000 per 50 kg bag as of 12th February 2018.

She said to minimize the volatility in the sugar sub-sector; the Ministry is working with this parliament to improve the Sugar Bill with the view to fast tracking its enactment. "When this Bill is enacted and implemented, most of the concerns of the public will be addressed and this will further improve stability in the sugar sector," Kyambadde said.