East Africa: Rwanda Pushing for Duty-Free Sugar Imports

Rwanda has requested its East African Community (EAC) counterparts to consider waiving import taxes imposed on sugar from outside the block as an incentive to increase supply and stabilise prices in the local market.

The Minister of Trade and Industry, François Kanimba, told Business Times that they want EAC to allow Rwanda to import sugar, duty-free, a move that would help avert the looming acute domestic supply shortage.

Once approved, the move will pave way for Rwanda to import 50,000 tonnes of sugar from Latin America and Asia in the next six months.

"We sent a request to the EAC secretariat for a waiver on sugar import taxes. This will make it cheaper on the local market. The waiver can be for six months as we monitor the market," Kanimba said.

Sugar imports outside EAC and COMESA attract a customs duty of 100 per cent depending on Cost Insurance and Flight. It also attracts a VAT of 18 per cent and an extra 5 per cent to importers without certificate of compliance.

Retail sugar prices in Rwanda rose by 25 per cent to Rwf1000 from Rwf800 in April this year on account of low supply from the region due to floods that hit sugar plantations and disrupted production.

Kanimba said that his Ministry held a meeting with local sugar importers who on top of the floods, cited the high demand for sugar from DR Congo and Sudan as one of the factors that reduced supply within EAC, thus triggering a price surge.

"The situation looks like its not going to end shortly, and we consider a waiver to be a medium solution as we intend to increase the capacity of local production," Kanimba said.

Rwanda's sole sugar miller, Kabuye sugar works, produces between 11 and 12 tonnes per month.

The company requested government for an extra 3,000 hectares of land to increase its sugar plantations and bridge the deficit. It currently grows sugarcane on 15,000 hectares of land.

Kanimba noted that government would look into their request to increase their capacity.

Mahakali Rao, the KSW Managing Director attributed the price increase to the maintenance period in Uganda and the global demand that increased by 22 percent.

"The maintenance period usually takes one to two months; we hope the situation will stabilise in August," Rao said.

He said that the factory's maintenance period started 13, April 2011 and ended on 3rd June 2011.

He assured that prices at the factory remain unchanged selling at Rwf30,500 for a 50 kilograms sack.