Uganda Sugar Imports to Increase after Sugar Tax Removal

Monday, 22nd August, 2011

Within days after President Museveni announced that the Uganda Government would allow importation of tax-free sugar, the commodity suddenly became more available and the retail price came down from sh7,000 to sh4,000.

Whereas the first batch of sugar to be imported under Museveni’s tax-free arrangement is yet to come, speculators, who were hoarding the sugar, have suddenly released it onto the market. In addition, large amounts of imported sugar that were in transit to South Sudan, DR Congo and Rwanda have been released into the market.

“I cannot tell the exact tonnage of sugar that was put on the market; however, traders had sugar in warehouses that was destined to Congo, South Sudan and Rwanda. They put the sugar on the market as soon as the import tax levy on sugar was lifted,” said Isa Sekito, the Kampala City Traders Association (KACITA) publicist.

Under the tax-free arrangement, Madhvani Group, the proprietors of the Kakira Sugar Company, are set to import the first batch of 23,000 tonnes of sugar into the country after the removal of the 25% tax levy, a top trader’s representative has revealed.

Speaking to Sunday Vision after meeting President Museveni, Sekito said the sugar consignment is due to arrive on August 28.

“The President told us that by the time he announced the removal of the 25% tax levy on sugar imports, he had authorised Madhvani to import 23,000 tonnes of sugar into the country. We are a little saddened that a sugar company is being allowed to import sugar into the country. However, the President said other companies will bid to import an extra 17,000 tonnes after the Madhvani consignment arrives,” he said.

Sekito said the President consented to have the shilling-dollar exchange rate fixed at sh2,300 for imports for the next three months to stabilise the economy. Aston Kajara, the state minister for finance (investments), who attended the meeting, was tasked to coordinate the changes to the affected government parastatal bodies.

Jim Kabeho, a director at the Madhvani Group of Companies and chairman of the Uganda Sugarcane Technologists Association, said they have continued to sell sugar at the same price as before. The price changes seen on the market imply that middlemen have been cheating Ugandans.

“We sell a 50kg bag at sh120,000 at the factory, but traders are selling the same for between sh200,000 and sh250,000, translating to between sh4,000 and sh5,000 a kilo, which is far above the recommended retail price of sh2,700.

“We are currently looking for overseas suppliers of sugar overseas. Prices will continue falling once imported sugar arrives,” he said.

By SAMUEL SANYA : The New Vision Newspaper