Imported sugar: Local sugar manufacturers seek parliament's intervention

Sugar companies have petitioned parliament to reign in the sugar bonds that are about to run local manufacturers out of business.

Under their umbrella body, Uganda Sugar Manufacturers Association, sugar manufactures led by their Chairman Jim Kabeho have decried sugar imports which are stocked in various bonds, thus increasing local stockpiles.

"The sugar bonds have never been closed, we went to court and got an injunction of about two months but it has now taken a year and they are still operational," Jim Kabeho said.

Kabeho informed the Speaker of Parliament Rebecca Kadaga how the failure by the government to implement the presidential directive of blocking the sugar imports is responsible for the stockpiles that have been building up since last year and have now worsened with decrease in exports due to lack of market.

President Museveni in a letter to the Prime Minister dated August 19, 2018, had directed the closure of the said sugar bonds because they are killing local industries.

"More importantly, I now direct that working with the Attorney General this ‘Sugar Bond' should be immediately closed, never to be reopened again. Who is operating this Sugar Bond in any case? I really want to know who they are and who allowed them?" reads the President's letter in part.

According to Kabeho, the implementation of this directive has, however, never seen the light of, something he says has not only suffocated their exports' market but has also encroached on their local market.

"Currently, South Sudan and DRC Congo, buy their sugar from Uganda sugar bonds, which is cheaper and not taxed," said Kabeho.

He further explained to the  Speaker that due to the closure of the Kenya market since February, most export markets have followed suit by closing out Uganda's sugar.

Kabeho argues that this has caused a decline in the locally manufactured sugar, hence causing sugar stockpiles.

"Kakira Sugar alone has 25 tonnes of sugar which are about $20m," he said.

According to data from Bank of Uganda, cumulative exports for the year ended August 2020, dropped to $95.7m (about sh359b) from $114.3m (sh428b) in the same period between August 2018 and August 2019.

The decline represents an annual decline of 19 per cent during the period.

According to the Uganda Sugar Manufacturers Association this year, the industry is expected to produce about 550,000 tonnes, of which only 370,000 tonnes will be consumed locally.

With low export of Ugandan sugar, the association has warned that there is likely to be an increase in stockpiles to about 155,000 tonnes.

This was revealed during a meeting between Speaker of Parliament Rebecca Kadaga and members of the Uganda Sugar Manufacturers Association who operate in the Busoga on Friday.

Kadaga tasked the investors to prioritize the issue of corporate social responsibility to the communities in which they operate by maintaining the infrastructure like roads, which are usually worn out by the trucks that carry sugarcane.

The speaker implored the sugarcane companies to work hand in hand with the local governments of Jinja, Kaliro, and Mayuge districts to ensure that the feeder roads in those areas are worked upon under the public-private partnership arrangement.

In their response, sugar manufactures pledged their support to the initiative as proposed by the Speaker but blamed the poor road network in the sugarcane growing community to the poor weather condition.