Statement on Imported Sugar

The war against sub-standard & counterfeit goods in Kenya must not be conducted at the expense of Kenya’s legitimate local industry

Kenya Association of Manufacturers would like to register its concern and dismay over reports in the media that negligently and inaccurately list genuine Manufacturers in the country as ‘importing Sugar Barons’ in the context of illicit trade, and specifically the issue on imported sugar.

Whilst the fight against illicit trade is a vital intervention and one that KAM has been at the forefront of championing for more than 10 years, it is essential that we do not divert these efforts and resources to frustrate genuine businesses, especially in the context of a manufacturing sector that is severely affected by the trade of counterfeit and sub-standard goods.

The allegations that the manufacturing companies listed therein have been illegally importing sugar for production are unfounded and false. We wish to clarify that Kenyan manufacturers importing industrial sugar for manufacture of products and goods, do so in accordance with a verified process under the EAC duty remission scheme. These Regulations are specific and require manufacturers to secure advance approval from the Regulators, for each consignment, on price, quality, origin and volume; thus wholly separated from the provisions under investigation that allowed for the mass importation of sugar in 2017. We are hereby attaching legal notices 5, 8 and 9 on Industrial and Raw Sugar importation under Duty Remission which is the true representation on the regulations under which manufacturers are allowed to import industrial sugar.

Of utmost concern is the threat that inaccurate and negligent reports such as these pose to the country’s efforts to boost trade with its neighbours in the EAC and markets in other trading blocs. In the past three months we have had difficulties trading sugar-based products with Tanzania and Uganda due to a misinterpretation of Gazette Notice 4536 – which was issued to combat the effects of drought and famine in the country. However, the listed manufacturers in the newspaper did not import sugar under this exemption. Furthermore any sugar-based products made in Kenya are manufactured using industrial sugarimported under the EAC wide duty remission which attracts a payable rate of 10.00% duty.  The process by which a manufacturer can import sugar is annexed herein.

Kenya Revenue Authority (KRA) has provided detailed information to our partner states, with evidence that manufacturers of sugar-based products imported industrial sugar under EAC duty remission scheme. They have additionally provided evidence of sample paid entries that demonstrate that companies producing these goods have been subjected to the 10% duty as they fall under EAC duty remission scheme.

Hence it is a big blow to local industry when these inaccurate media reports surface to undermine significant progress that has been made by the country towards strengthening trade relations with our valued partner states. This report has also contributed to the unnecessary closure by Government agencies of manufacturer’s white refined sugar stores when focus and resources should be targeting illicit and sub-standard goods.

As a country, we need to focus on the very real and malevolent enemy that is counterfeiters and illicit trade networks; that become increasingly sophisticated and evasive, enabled by corruption and loopholes in our regulatory system. This is where our fight should be centered.

It is important that accurate reports on these issues are provided to the public. It is counterproductive and punitive to industry to target those who genuinely conduct their business towards achieving economic growth and development.

Annex 1:  Refined Sugar Importation (Process)

1. Every Kenyan manufacturer must be registered and maintain their registration as a manufacturer with the Sugar Directorate.
2. Every manufacturer, other than where that manufacturer only imports sugar from a Comesa Member State, must be gazetted under the EAC Customs Management Duty Remission Scheme.
3. Subject to 1 and 2 above, the manufacturer will engage with a supplier and receive a pro-forma invoice with which to apply for an Import Declaration Form (IDF).
4. The manufacturer will apply for pre-approval from the Sugar Directorate for each and every separate shipment of refined sugar, regardless of origin. The application shall declare the origin, volume, quality and price.
5. The manufacturer, where the refined sugar originates from outside of Comesa, shall apply to The National Treasury for authority for each and every separate shipment of refined sugar. The application shall declare the origin, volume, quality and price.
6. With the relevant pre-approvals in place a manufacturer shall have the refined sugar delivered to the port of entry where Customs formalities that shall include full tax payments, separate authorizations from the Sugar Directorate, KRA, KeBS and Port Health shall be completed before the goods may be released to the manufacturer.
7. Under the Duty Remission Scheme a manufacturer is then required to reconcile refined sugar receipts with consumption and with production, providing the data to the Regulators for audit in order that the manufacturer may maintain their Registration and gazette quota.