Kenya in 2022 through the Kenya Revenue Authority introduced an additional 2% import Declaration Fee (IDF) and a 3% Railway Development Levy on sugar from Uganda. Kenya has thus moved from non -tariff barriers to direct tariff barriers against Uganda sugar which contradicts the set EAC Custom Union. This will adversely affect Uganda Sugar Mills by prohibitively increasing Uganda’s sugar landing cost in Kenya.
There is a plan to move to Joint Permanent Commissions (JPCs) and Bilateral Arrangements from the traditional EAC Protocols which are dominated by Non-tariff barriers (NTBs) and Trade barriers (TB). The Government of Uganda has arranged two presidential visits of Burundi and DRC to establish JPC’s with the two Countries. The team will include Ministries of Foreign Affairs, EA Community Affairs, Trade and Industry, Internal Affairs, Defence and Private Sector. The JPC’ will establish among many other things Trade Promotion between the three countries.
The lack of free movement of goods in EA market remains a major challenge – Uganda being a surplus sugar producer of 150,000 to 160, 000 tonnes of sugar a year. Much of this sugar is exported illegally through porus boarders to Kenya and other sourrounding countries.
Uganda’s Sugar Production: 500,000 tonnes in 2021/22 that is an increase of 15,000 tonnes (3.09%) in the season of 2021/22 in comparison with the season of 2020/21. Uganda currently has zero sugar stocks down from the stock of 50,000 MT November and 30,000MT in December 2021.
All sugar bonds were closed. We believe there is no sugar in bonds. Imported sugar is illegally being leaked into the local market without paying taxes. This is the reason for the current depletion of sugar stocks. URA legal team won the case logged by sugar importers in the tax appeals tribunal. Interim order to continue warehousing sugar ended by 30th September 2020 and URA will start enforcing the decision of not allowing sugar warehousing in Uganda.
The International Sugar Organisation anticipates that deficit in 2021/22 will narrow further to 1.928 mln tonnes, while world consumption will be increased to 172.44 mln tonnes in 2021/22. The global COVID-19 pandemic changed perceptions and eagerness around holding stocks in the last two years. But this sentiment is now waning. The anticipated stock balance, at the end of 2021/22, is 94.425 mln tonnes, up 1.172 mln tonnes since November.