Local sweet firms take Sh136m hit from Kenya, Dar trade tiff

Earnings from exports by Kenyan sugar confectionery firms fell by Sh136 million in the six months ended June compared with a similar period last year, statistics show, partly reflecting unending trade tiff with Tanzania and Uganda.

Kenya National Bureau of Statistics (KNBS) latest data indicate earnings from sugar confectionery such as sweets, biscuits and chocolate dropped to Sh2.378 billion in the period from Sh2.514 billion a year earlier.

Dar es Salaam and Kampala slapped a 25 per cent duty on Kenyan-made sugar confectionery earlier in the year, claimed use of zero-rated industrial sugar which tilted competition in favour of Nairobi factories.

The restrictions arose after Kenya successfully applied for a year-long permission from the East Africa Community (EAC) July 2017 to ship in table sugar at duty free following a biting drought that cut production.

Tanzanian and Ugandan authorities have claimed Kenyan factories took advantage of the window to import industrial sugar at zero duty as opposed to 10 per cent under the EAC Common External Tariff.

Verification missions from Dar and Kampala separately failed to prove claim of use of zero-rated industrial sugar by Kenyan sugar confectionery makers.

They, however, maintain the restriction of duty-free entry for Kenyan-made confectionery products will continue until they are satisfied no zero-duty industrial sugar is being used in their processing.

The KNBS data shows 14,287.6 metric tonnes of sugar confectionery were exported in the January-June 2018 period, a drop of 1,542.9 tonnes compared with the same period a year earlier.

The Kenyan confectionery factories earned an average Sh166,417.03 per tonne, 4.8 per cent higher than the Sh158,793.43 they earned in 2017.

The Kenya Association of Manufacturers (KAM) has warned the confectionery industry is headed for tougher times after Treasury secretary Henry Rotich imposed a Sh20 excise duty for every kilo.

Mr Rotich has explained the tax will help reduce lifestyle diseases such diabetes and counter rising obesity cases, thus saving billions of shillings spent on treating or managing them.

The confectionery industry, made up of nine main factories, sustained 3,479 jobs last year, a slight improvement from 3,333 jobs in 2016, according to data provided by KAM.

They are Kenafric Industries, Kilifi-based Mzuri Sweets, the Wrigley Company, Patco Industries, Kenya Sweets Ltd, Candy Kenya, Rok Industries, Mombasa’s Sweet R Us Ltd and Confini Ltd.

“Recent significant investments in that sector will be hard hit. The excise duty rate of Sh20 per kilogramme will lead to these costs being passed on to consumers,” KAM chair Sachen Gudka said via e-mail.

“A company such as Wrigley’s had already commissioned a plant worth Sh7 billion in 2017 and these new tax measures will have an implication of the number of jobs that can be created in similar planned investments.”

Source Business Daily

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