The government of Kenya is looking to privatize publicly owned sugar factories. This is in a bid to cushion the present dip in sugar production in the country. Furthermore, this comes when the 2016 agreement protecting the country form cheap imports is almost running its course. The agreement is between Kenya and The Common Market of Eastern and Southern Africa.
According to media reports, Miwani and Muhoroni factories are the first on the list in the privatization initiative set to take place within the next three months. Countries within the COMESA region are granted duty-free access to the market. However, Kenya was exempted from the same, allowing it to import sugar from outside the region.
The exemption is set to expire in February next year. Nonetheless, this is only on condition that the country will have privatised its publicly-owned sugar companies to improve efficiency and increase production.
According to Privatisation Commission acting chief executive Jacqueline Muindi, the plan to privatise will serve the purpose of addressing the excess debt and the resources required by the companies. This, she says, is also inclusive of rehabilitation, expansion and modernisation of the mills.
On the other hand, Kenya is also in a position to seek a further extension of safeguards from cheap sugar imports. That is, given the bottlenecks emerging from the privatisation process and the country’s falling sugarcane production. The latter has resulted in high sugar costs compared to other countries within the regional block.
The privatisation, will hopefully improve the competitiveness of its sugar sector. This, in turn, will end the country’s perennial reliance on COMESA safeguards from duty-free sugar in the region. Kenya’s failure to acquire the safeguards will be a plus to the COMESA farmers as well as consumers.