Saturday, 22 August 2015

Contextualizing Kenya’s Sugarnomics.

The last one week has been characterized by politicization of the now famous sugar deal between Kenya and Uganda. Our primary problem as a nation is the rate at which we tend to lace issues and matters of great importance with cheap politics that is only full of propaganda. These political gimmicks and silly political games are often orchestrated by the so-called political “leaders” whose aim is to further their own interests by making vital issues to be nebulous. Before we delve into cheap politicking and mud-slinging, I wish that we should have a clear understanding of this sugar deal that is now aiding politicians to gain political mileage to sustain and maintain their political lifeline.

The past regimes and the present one have done very little to resuscitate the sugar sub-sector because evidently all the government-owned millers are on the death bed. I have always been hearing of the plan by the government to privatize these firms but the pace at which this plan is being translated into action leaves a lot to be desired. In any case, what is the economic role of the government in face of state enterprises which aren’t realizing par performance? If privatization would have taken place, at least it gives hope of having better management, ceteris paribus.

But here we have the sugar deal that has been the oven for all these hoopla and political braggadocio. Before we criticize the agreement between the governments of Kenya and Uganda, it is important to gain a meaningful understanding of the fundamentals that underline this trade agreement. The first fundamental aspect that we need to be aware of is the agreement and concessions regarding trade in sugar among the COMESA member states way back in 2002. All the member states were to eradicate the existing protectionist measures that would hinder the flow of sugar from one country to another one. But the then government of the day made a trade interception and pleaded for the continuation of the protectionist measures and as a result in March 2002, COMESA granted Kenya protectionist measures for one year so as to prevent cheap sugar from member countries from entering Kenya. 

However, in March 2003, this deal concerning protectionism of the sugar sub-sector was extended for one year and it was to come to a halt in March 2004. Seemingly this never happened because in same month the protectionist measures were extended for the second time to cover four years up to 2008. Come 2008, Kenya pleaded for another extension which came to an end in February 2014. This expiry of the protectionist measures gives rise to the question: is it economically correct for Kenya to allow importation of Ugandan sugar? Certainly, the answer is yes because both Kenya and Uganda are COMESA members and the protectionist measures granted to Kenya by COMESA came to an end and this hence justifies importation of Ugandan sugar.

The second fundamental aspect that we need to look at is the need to curb the deficit in sugar production that we experience as a country. Statistically, we have a shortage of approximately 200,000 tonnes per year. Our consumption is definitely higher than our rate of production. To be able to meet the quantity demanded then it warrants the importation of sugar from whichever country and in this case from Uganda. So, the question is: is it appropriate for Kenya to import Ugandan sugar? Of course yes as our demand levels for sugar outrun the total output of sugar that is produced. On a general scale, therefore, it is okay for us as a country to import Ugandan sugar.

As a nation we also ought to have taken advantage of the COMESA concessions to allow trade and free flow of sugar among the member states to ensure that we strategically position ourselves as a leading country in production of sugar. Kenya has the ability to produce sugar enough to cater for her domestic consumption and export the surplus. In fact, this should be the major issue of concern; why are we not producing sufficient quantities to meet our domestic sugar demand and export the extra quantities? This boils down to the inefficiencies that exist in the sugar industry which are due to the high costs of production. For instance, the cost of producing sugar in Kenya is Kshs.87,000 per tonne. This is considered to be very high in comparison with other countries producing sugar like Malawi whose costs of producing sugar range between Kshs.30,000 to Kshs.35,000 per tonne.

These costs are astronomical because of several reasons and key among them is the obsolete level of technology that is employed. Research and development focusing on the sugar sub-sector has not been carried out with the expected efficacy. This has led to the planting of poor sugarcane varieties occasioned with the use of traditional and odd methods of cultivation. The government should strive to give subsidies to reduce these costs. In addition, the sugar firms have fallen victim of maladministration and perennial mismanagement which is a primary feature of government-owned corporations. This calls for fast-tracking the process of privatization to salvage these firms.  Mismanagement is the reason as to why sugarcane farmers will always cry foul of delayed payments and other vices that crop up. At the end of it all, it  narrows down to the government to orchestrate all the necessary strategies to revive this important agro-economic industry. This is the bottom-line and there should be no debate about this. 

What irks me is the politicization of this matter as I stated earlier on. I suppose this is the Kenyan brand of politics of seizing any opportunity that involves a national issue and seeking and squeezing political rejuvenation and salvation from it. I register my utmost displeasure with both the opposition and the government for engaging in political side-shows as far as sugarnomics is concerned. It is immature and amateurish for the Deputy President William Ruto and the opposition chief Raila Odinga to engage in unending ranting and squabbling with each seeking to prove how politically correct they are with regard to this sugar deal.

For Odinga and the Coalition for Reforms and Democracy (CORD) to urge their supporters not purchase milk and milk products from Brookside Dairies that is owned by the Kenyatta family sounds sick and stupid. This depicts a lack of a clear development agenda. William Ruto, on the other hand, is not different because it is during his tenure as minister for agriculture that sugar cartels made colossal amount of money and he never blew the whistle. His advisors and PR team should try to advise him on how to portray an image of a leader who is way over and above cheap politicking. It is nauseating for him to go from one political rally to another one talking about the same issue. President Kenyatta talked about this issue once if not twice. You can see the difference between these two leaders. 

What really flummoxes my inner-self are the political arguments that supporters from the either side of the political divide are fronting which ooze a lot of ignorance. No politician will ever knock on your door to give you food or wine. Why are we always falling in the trap of these politicians? I understand that people will always seek to be identified as supporters of certain politicians but we always follow them blindly. The Kenyan political testament perhaps states that thou shall religiously follow what hath been sayeth by the politicians. Let the political leaders irrespective of belonging to the government or opposition show initiative of coming to the rescue of the sugarcane farmers, otherwise a delayed and effective intervention would lead the farmers to uproot the sugarcane. Finally, the government should ensure that we import Ugandan sugar and not sugar from Uganda. Get the difference and have a good day.