Notice will enable merchants to make billions from sugar

Corrupt elites have mastered the game of making big money from food shortages. We now know that the crippling maize crisis we are experiencing is not just about the drought we experienced last year. We knew we had gone through a drought and that food shortages were looming, but we still ended up exporting hundreds of thousands of tonnes of maize last year?

Granted, one can argue that we operate in a liberalised regime where traders can import and export whenever they choose as long as they pay the requisite duties. But the government cannot claim that they did not know what was happening because – under the Crops Act, 2013 – trade in scheduled crops must be subjected to licensing. Who licensed these greedy merchants to export maize?

And since we knew all along that we were likely to experience shortages, why didn’t we make adequate budgetary provisions for strategic reserve stocks? These shenanigans present a gripping lesson on the phenomenon known as State capture: how politically influential millers and their cronies in the administration can collude to influence State policy to create artificial food shortages and how merchants laugh all the way to the bank, while the ordinary mwananchi is unable to afford a meal. Enough about maize. The same thing is beginning to play out in the sugar industry. The government last week quietly opened the floodgates for cheap sugar imports ostensibly to mitigate against shortages but whose impact, in reality, will be to enable well-connected merchants to make billions from the prevailing high sugar prices.

UNPRECEDENTED MOVE

In a KenyaGazette notice published on Thursday, the government took an unprecedented move of announcing a free-for-all sugar imports regime supposed to begin this month and end on December 31.

Just other day, the Agriculture and Food Authority, which regulates and licenses sugar imports announced a comprehensive programme for Comesa sugar imports. I gather from well-placed sources within Kilimo House, Nairobi, that 6,000 tonnes of sugar is expected to dock at the Mombasa port in the coming weeks. Another 10,000 tonnes is already ordered and paid for.

So, why are we opening the floodgates for cheap and dumped non-Comesa sugar into the country when we have already committed and planned to import from Comesa? It is because powerful merchants have managed to lobby the government to change the rules to make it possible for them to flood the market with imports from Brazil, Thailand and India. When you scrutinise the KenyaGazette notice closely, there are several tell-tales. In the first place, it says that “any person”, is allowed to bring in sugar, implying that an importer does not need a licence. This raises the question: if you don’t issue licences, how would you know or regulate the quantities coming into the country? How do you assess the impact on local production?

Mark you, all the dealers in scheduled crops must be licensed Under the Crops Act, 2013. It reeks of double standards because in the very same KenyaGazette notice, the government has allowed free imports of powdered milk. In this case of milk, the notice prescribes specific quantities. But there is a requirement that the approval of the Kenya Dairy Board must be sought before duty-free milk imports can happen. Why is milk being treated differently from sugar? But the most blatant lie in the scheme is an attempt to purport to show that the duty-free sugar imports the government has allowed are in line with the provision of the East African Customs Management Act, 2014.

SUGAR WARS

Why are we stoking unnecessary sugar wars with other member States of the East African Community? The East African Customs Management Act, 2014, only allows a member to unilaterally declare duty-free imports in this manner when there is an emergency such as floods. And under this window, the imports must be by the government itself, an agency of the State or a relief organisation.

Duty-free imports under the East African Customs Act, 2014 cannot be done for profit. Why are we breaking the law to allow merchants to make money from sugar imports. If anything, sugar prices are still below the levels they reached in 2011 when 50kg was at some stage selling at Sh1,100. Then, Uganda and Tanzania, who were also hit by shortages, applied for a stay of execution of the Common External Tariff under the Customs Union Protocol that was granted.

It is an open secret that shiploads of illegally imported sugar have been stuck at the Mombasa port for months. Thursday's Kenya Gazette notice has now opened a window for these consignments into the market. What a mess!

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