Farmers in Uganda have challenged in court a decision to allow the importation of duty-free sugar from Uganda above the Common Market for East and Southern Africa (Comesa) quota.
A group of farmers through the Kongaren Multipurpose Cooperative Society argues that it was wrong for Kenya and Uganda, being Comesa member states, to engage in separate bilateral trade agreements outside the bloc’s treaty.
In a petition at the Mombasa High Court, the cooperative society says sometime in March 2019, the two countries entered into a special arrangement in which Kenya granted Uganda sugar-free access to its market of up to 90,000 metric tonnes above the quota allocated by Comesa to it (Kenya) in 2016.
Import duty
Through lawyer Gikandi Ngibuini, the petitioner argues that based on the arrangement, Uganda has been exporting sugar to Kenya on zero percent import duty despite the fact that it should incur 20 percent import tax.
“There is a real threat of huge quantities of sugar flooding the Kenyan market, which are to be cleared for home use in the country from Uganda on a zero customs and excise duty basis,” states part of the petition.
The cooperative society further argues that flooding of Ugandan sugar means that the farmers’ produce will be costlier in the market and not attract buyers. The petitioners have sued the Ministry of Industrialisation Trade and Enterprise Development, Agriculture and Food Authority, Kenya Revenue Authority, Ministry of Finance and the Attorney-General.
The cooperative society wants a declaratory order issued that the decision allowing importation of duty-free sugar from Uganda above the Comesa quota is null and void. It also wants an order issued that preferential treatment accorded to Uganda where its sugar is granted free access to the Kenyan market amounts to discrimination, thus null and void.
According to the society, as a result of the special arrangement, Uganda has been exporting the commodity to Kenya on zero percent import duty which means that any sugar imports within or above the Comesa quota is on zero tax. It further argues that Kenya has granted Uganda preferential treatment thus discriminating against other Comesa member states with equal capacity to export sugar into the country.
“Similarly, this arrangement is detrimental to other sugar industry stakeholders and businessmen in the country who have permits to import sugar from various member states of Comesa,” argues the petitioner.
The society further says the decision according to Uganda preferential treatment was made without the involvement and participation of various stakeholders in the sugar industry who are affected by the decision.
The petitioner argues that the government should make a disclosure on the amount of sugar imported into the country from January to date and further disallow importation of any duty-free sugar from Comesa member states after the quota amount has been achieved. It says that the separate bilateral agreement entered into between Kenya and Uganda is negatively impacting on the Kenyan economy in terms of revenue payable to the government.
