East African Community Waive Taxes on Imported Sugar for Uganda and Rwanda

Ministers of trade, industry, finance and investment from the East African Community (EAC) partner states have approved requests by Uganda and Rwanda to stay application of Common External Tariff (CET) on 50,000 and 40,000 metric tines respectively of imported sugar in six months, an official has said.

"We have however decided that any sugar exported from Rwanda and Uganda should attract sensitive rates of the CET during the period of six months," Uganda Minister of State for Privatisation Aston Kajara told East African Business Week in Arusha, Tanzania.

The Minister who among other ministers attended sectoral council on trade, industry, finance and investment ministerial session said that Uganda has suffered a shortfall in production of sugar this year which resulted into reduced supply and very high prices to consumers.

The retail price in the market had increased by up to 100% from Ush2500 per kilogram to over Ush5000 in most retail outlets in Kampala.

"Although domestic sugar production has steadily increased over the years with projected output of 350,000 metric tones this year, actual monthly output has fallen below projections since April 2011," he said.

He said that despite the projected 30% increase in production in 2011, the domestic industry has faced adverse weather conditions brought by prolonged drought in the sugar growing areas.

"As a result there was a shortfall of 15,000 metric tones in the country by end of June 2011, in addition Kinyara, which undertook a massive expansion program last year to produce 11,00 metric tones per month has suffered from lack of cane resulting from wildfires where it lost over 4,000hectares,".

He added that the company is currently out of production and expects to resume production in February 2012 when the cane will have matured and by the end of January 2012, there will be a shortfall of approximately 70,000metirc tones in the country.

"That is why Uganda requested the EAC Secretary General Amb. Dr. Richard Sezibera for stay of application of CET on sugar imports from outside EAC into Uganda and apply import duty rate of zero percent up to January 2012, we expect to import 40,000 metric tones under the arrangement and the balance to be met by local production," he explained.

Industry sources told East African Business Week that Rwanda's request was based on having suffered severe flooding in the sugar cane fields.

"This resulted into the inability to continue production of sugar since April 2011, Rwanda imports sugar from Kagera factory in Tanzania, Kinyara and Kakira sugar factories in Uganda which factories closed in the last two to three months for maintenance,".

It was also apparent that there is general shortage of sugar in the region due to the annual closure of sugar factories and therefore regional supplies have had challenges meeting the regional demand," Rwanda argued.

"This led to severe shortage of sugar in Rwanda causing an over 50% increase in the domestic price for sugar and this caused a great deal of hardship to Rwanda consumers hence a request for a stay of CET," the source explained.

Meanwhile the Ministers have also approved a stay of application of CET rates for importation of inputs for Tanzania Electricity Supply Company (Tanesco) emergency generation project for two years and the United Republic of Tanzania to submit a refined list specifying the inputs and their HS codes against which the stay of application of CET will apply.

Tanzania informed the meeting that it is experiencing serious power shortages which compel the national power generating company (TANESCO) to import various equipments to support the energy sector.

"They therefore requested for a specific exemption for TANESCO for a period of two years to import various equipments and parts," he said quoting the report of the council of ministers that they signed on August 29, after a one-day sectoral meeting held at Mt. Meru hotel in Arusha, Tanzania.

He said that Tanzania was asked to provide a refined list in order to present dutiable inputs with their tax codes for consideration for waiver of taxes by the sectoral council of ministers on trade, investment, finance and is still being awaited.

The meeting noted that Tanzania needed to refine the list by specifying the inputs and their tariff codes as requested by the Secretariat against which the stay of application of CET will apply.