Tanzania: Are the Tanzanian sugar barons on their way back?
Dar es Salaam – The government’s intention to build local sugar processing capacity could be jeopardized if the barons were to reappear, analysts said.
In recent years, investors have pumped colossal sums into sugar production with the aim of meeting the government’s goal of ensuring Tanzania becomes self-sufficient in product by 2025.
These include the approval of a 571.6 billion shillings expansion project for Kilombero Sugar; Said Salim Bakhresa $ 300 million (approximately Sh690 billion) Bagamoyo Sugar Ltd, and the Mkulazi Sugar Company in Morogoro which is implemented by the National Social Security Fund (NSSF).
The Kilombero Sugar project aims to nearly double the company’s production capacity from 144,000 tonnes to 271,000 tonnes per year, while Bagamoyo Sugar Ltd will start with an installed annual production capacity of 30,000 to 35,000 tonnes, before expanding. increase to 100,000 tonnes. NSSF’s Mkulazi Sugar project is expected to add 50,000 tonnes of sugar to the domestic market.
The projects are enough to fill Tanzania’s sugar deficit.
But, what happened at a business meeting attended by President Samia Suluhu Hassan and her Ugandan counterpart, President Yoweri Museveni, points to the possibility that sugar imports could persist.
President Hassan said she was informed that members of the business community in Uganda had surplus sugar that they wanted to export to Tanzania, but were discouraged by a statement from the Minister (of Agriculture ), who said no imports would be purchased.
“It was nonsense. Honorable President, we are going to buy sugar from Uganda,” President Hassan told her Ugandan counterpart during a live televised event.
But yesterday the Chairman of the Board of the Kilombero Sugar Company, Mr. Ami Mpungwe, said in a confirmed tweet: âIt is clear that President Museveni has misled / misinformed our Chairman. Granted, all the sugar companies have imported sugar from Uganda this year, including the construction one, Bagamoyo Sugar, although Ugandan sugar is the least competitive in the region in terms of price. Kilombero Sugar bought 4,300 tonnes.
Contacted to comment on the matter, Mr Mpungwe said there were three businessmen who controlled the sugar trade in the past – and they may struggle to regain their status after the deal. between government and producers to manage the sugar industry.
“They are doing this after the stabilization of the sugar market which was in the past saturated with subsidized sugar imports, making the local product less competitive,” he said over the phone.
Mr Mpungwe, who is also a former Tanzanian ambassador to South Africa, said that to manage the industry, local producers and the government have agreed to establish the country’s exact sugar deficit – and to import into good time.
He said they also agreed to import at the correct tariff and provide pro-rata import shares, or proportional allocation among local sugar producers.
According to him, the deal has helped boost investor confidence, including the Kilombero Sugar Company, which has injected $ 238.5 million into its expansion plan.
Mr Mpungwe said the late provision of sugar import permits this year has forced Tanzanian importers to source sugar from Uganda virtually next door.
“I support those who are behind the maintenance of the current sugar import procedures which have stabilized the sector after years of arbitrary imports,” he said.
“Import priority will be given to regional markets which will help us cut supply chains after providing us with competitive prices.”
But, sugar import and export traders said they supported an environment that did not give any part of society a monopoly.
“The import trade in sugar, as we know it, is currently monopolized as sugar producers take advantage of the fact that they are the only ones allowed to trade the essential commodity,” one of the traders told The Citizen at the time. a telephone interview on condition of anonymity.
Another trader said those playing in the sector and individual investors have been targeted for exclusion from trade by Tanzania’s major sugar importers for fear of competition.
“The protectionism of the sugar trade in the country is not helping consumers or sugar cane producers as one would expect,” the trader noted, adding that the import of the commodity was now almost parallel to the war on drugs.
They support and welcome President Hassan’s position that Tanzania should import sugar from Uganda and other regional markets to fill the gap in local production.
âFor fair competition – and for consumers to benefit from it – we advocate that sugar producers be dispossessed of the monopoly they enjoy. It is surprising that local sugar producers fear competition from a member of the East African Community (EAC) despite the applicable common rules. customs tariff regime, âsaid the trader.
Contacted on this matter, the Managing Director of the Sugar Board of Tanzania (SBT), Mr. Kenneth Bengesi, declined to comment. âI have traveled outside the country and therefore am not familiar with new developments. Until I am well informed I reserve my comments,â he said, a little on the defensive.
Agriculture Minister Professor Adolf Mkenda appears in a video clip warning traders who harass SBT over sugar import permits to stop doing so.
He said the sugar imports were linked to corruption and fraud involving a few unscrupulous people at the expense of the majority of Tanzanians.
“The business is like the narcotics that forced some ministers to resign in the past. However, the amendment to the law made provision for the processing of sugar import permits,” he said.
In another video clip, the late former President John Magufuli – who died in office on March 17 this year – tasked Prime Minister Kassim Majaliwa at the time to ensure the proper provision of sugar import permits as the government planned to attract more investors into sugar production – creating jobs for young people and a reliable domestic market for small-scale sugar cane producers.