The Minister of Trade, Industry and Cooperatives, Amelia Kyambadde has revealed that smuggling of tax free sugar into Uganda is killing the sector.
The minister made the remarks on Tuesday in her presentation to Parliament on the importation of one million tons of duty free sugar from Kenya.
“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, 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,” Kyambadde said.
She revealed that to bring the current situation under control, the Government has agreed to undertake operations to curtail smuggling of sugar across our borders commencing this week.
The government will also allow controlled export of sugar [since Uganda has surplus 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 borders,” Kyambadde said, adding: “We are also clamping down on illegal jaggeries which are poaching sugarcane especially in Bunyoro where over 20 are currently operating.”
She noted that the sugar industry is one of the fastest growing industries in Uganda contributing over Shs290 billion 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.
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, Kyambadde 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, the Minister further said.
Kenya produced 327,000 MT against demand of over 800,000 MT in 2017; Tanzania had a shortage of over 200,000 MT and Rwanda a shortage of 70,000 MT.
A Kilo Of Sugar Now At Shs2760
Early last year, sugar prices hit a maximum of Shs8,500 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, increased cost of sugar cane from Shs85,000 (per 50kg bag) in 2016 to Shs175,000 in 2017.
“This has however changed and prices were Shs190,000 per 50kg bag (Shs3800 per kilo) in October to December 2017 and currently it is UGX 138,000 per 50 kg bag (Shs2760 per kilo) as of yesterday 12th February 2018,” Kyambadde said.
“The above drastic drop in sugar price has been caused mainly by smuggling of duty free sugar from the Republic of Kenya,” she said, adding that they e have confirmed with Uganda Revenue Authority that there is no direct importation of duty free sugar, there is no dumping of sugar in transit within the country and the smuggling is mainly done by boda bodas “through our porous borders and then re-bagged in branded bags of Kakira, Kinyara and Lugazi sugar making it difficult for URA to seize.”
However, URA operations seized over 55MT of illicit sugar from July to December 2017, the Minister said.
She noted that sugar millers have stock piled over 50,000 Metric tons of sugar.
“To minimize the volatility in the sugar sub-sector, the Ministry is working with this Honourable House 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.