Kenyan sugar refiner Kibos Sugar is planning to relocate its factory to Rwanda’s special economic zone, citing challenges with Kenyan regulations that hinder duty-free exports to the regional market, reported Food Business Africa.
The decision follows Kenya’s failure to grant the company special economic status, which would have facilitated duty-free exports.
“We are making plans to move the plant to Rwanda, where the government has allocated us land within the special economic zone,” a senior Kibos official stated.
The move poses a challenge to Kenya’s standing as an appealing investment destination.
Kibos has faced difficulties in commissioning its Ksh200 million facility, equipped with a capacity of 150,000 tonnes, due to stringent trade regulations governed by the East African Customs Management Act.
Current regulations subject goods produced from duty-free imported raw materials to taxes when exported to East African Community (EAC) member countries, rendering Kibos’ products uncompetitive in the market.
As a result, Kibos, the sole company with an industrial sugar plant in Kenya, is contemplating importing raw sugar from countries such as Brazil or India for processing.
Jude Chesire, Head of the Sugar Directorate, acknowledged assisting Kibos but noted that addressing duty-related issues falls under the purview of regional trade ministers.
The news comes amidst a decline in sugar imports in Kenya, reaching a seven-month low in February 2024, reflecting a notable increase in domestic sugar production.
This surge in domestic production is attributed to the government’s decision to lift the five-month ban on sugar imports in December 2023, aimed at allowing cane to mature and meet the processing needs of local factories.
Data from the Sugar Directorate indicates that sugar imports stood at 42,381 tonnes last month, marking the lowest level since July 2023 when the country imported 27,179 tonnes.
Kenya, a net importer of refined sugar primarily used in confectionery and beverage production, annually imports up to 150,000 tonnes to meet domestic demand.
