Kenya’s sugar sub-sector plays a vital role in the agricultural sector and economy at large. The industry contributes to food security, employment creation, regional development and improved livelihoods for more than 8 million Kenyans. It is a source of income for over 500,000 small-scale farmers who supply over 90% of the milled cane.
However, the sector continues to face challenges that hinder its effectiveness as an economic and social catalyst. Antony Mwangi, CEO of Kenya Association of Manufacturers, weighs in on the industry.
What are the measures that exist at KAM to address challenges that the millers/industry face?
We continue to engage the government on addressing the challenges facing the sugar industry in Kenya. This is guided by the industrialized agriculture pillar of our ‘Manufacturing 20by30 Agenda’.
With agriculture, we should have the end in mind, meaning what markets the agricultural produce will serve, at what cost and of which quality. This is why the linkage between agriculture and industry is very crucial.
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We have taken a step further to find solutions that would enhance Kenya’s food security through increased productivity and higher value addition and exports.
Increasing the productivity of crops that impact our food security will bring down the cost of finished goods, subsequently, lower the cost of living.
On the other hand, identifying crops with potential for higher value addition and that have huge export market opportunities will accelerate growth and hedge us against adverse terms of trade shocks. For example, processing avocadoes to make avocado oil and other extracts, pyrethrum to make ingredients for insecticides, and cotton to make fabric.
What can spur the sugar sector?
The sugarcane industry seeks to find new ways to reposition itself competitively. This requires it to go beyond the production of sugar towards valuing the sugarcane as a whole and exploiting market opportunities presented by multiple sugarcane products.
KAM has developed the Sugar Sub-Sector Deep Dive, which collates and aggregates recommendations to the challenges that ail the sector. These include:
Enhanced regulatory framework and oversight mechanism for coordinating sugar import/export:
Stringent enforcement mechanism of 100% duty for sugar from the rest of the world market except from COMESA.
Establish proper safeguards and remedial mechanisms with COMESA Secretariat to ensure that net importing countries within COMESA do not export to Kenya.
Establishment of controls and enforcement of ban of sugar imports by sugar millers.
Set up a multi-agency team to enforce and increase surveillance including at the borders.
Operationalisation of Kenya Trade Remedies Agency (KETRA).
Laws, regulations and structures to support the subsector:
Enact the Sugar Act 2019 with amendments, and establishment of Rules and regulations as per the Sugar Task Force Report.
Create a stakeholders’ committee comprising farmers, millers, regulator, research institute, national and county government with a code of conduct for the industry.
Gazettement and enforcement of Sugar Regulations.
Benchmark with international standards.
Develop systems that will ensure synchronization of milling capacity and sugarcane supply.
Enact the proposed County Licensing (Uniform Procedures) Bill, 2022.
National Sugar Policy and Strategy
Draft and implement a seed cane policy.
Institute recommendations from the 2019 Sugar Task Force Report.
Introduce initiatives for irrigation, subsidized fertilizer and other farm inputs.
Establish harvesting and transport guidelines and infrastructure to reduce infield and transit losses.
Develop diversification strategies with national and county governments among other stakeholders in line with market opportunities.
Negotiate with Kenya Electricity Transmission Company (KETRACO) to develop the requisite infrastructure for transfer of cogenerated electricity from the mills to the nearest Kenya Power and Lighting Company (KPLC) sub-stations.
Enhance capacity-building, research and development
Re-establish an independent public sugar institute with relevant structures to address the challenges across the value chain.
Establish research field stations to undertake sugar industry related research.
Reinstate the Sugar Development Levy to support the research institute.
Establish a variety of development and release programmes jointly with stakeholders.
Develop strategies with national and county governments among other stakeholders on capacity building, including seed variety and best practices.
Institute sugarcane development funding
Re-introduction of the Sugar Development Levy at the rate of 4% to support the industry on cane development research, infrastructure development, factory rehabilitation and administration. Sugar Deveopment Levy shall also draw revenue from imported sugar.
Institute proper control mechanism to ensure funds are used for intended purpose.
Amplify packaging and traceability
Enforcement of regulations on repackaging of both locally produced and imported sugar.
Institute adequate tracking mechanisms.
Since your appointment in mid-September last year, how is the going? What are you proud of so far?
Working at Kenya Association of Manufacturers (KAM) is an honour. I get to interact with manufacturers on a daily basis. Recording a win for industry is a win for the country. This is because a thriving manufacturing sector means we are better positioned to achieve economic growth.
My biggest win is the launch of the Kenya Manufacturing 20BY30 Agenda, last year, in partnership with the Ministry of Trade, Investments and Industry. We presented the plan to H. E. President William Ruto.
This is a plan to increase the manufacturing sector’s contribution to the GDP from the current 7.2% (Circa Sh 1 trillion) to 20% (circa Sh5 trillion) by 2030. Additionally, we aim at increasing direct jobs from the current circa 348,000 to circa 980,000 jobs.
The plan is guided by 4 pillars, which, if implemented, shall transform our economy. The pillars include global competitiveness, export-led growth, industrialized agriculture and SME development.
Thus far, the government has adopted an export-led growth strategy as part of its plan to transform the economy, a key win for the Association.
