While local producers including Kilombero Sugar vowed not to release their sugar owing to imports from Malawi and Zambia, the government outlined measures to protect the local industries by introducing sugar import mechanism.

 

The new modalities included creating a bulk sugar importation entity by sugar producers partly to save the industry, which contributes 1 per cent to the national gross domestic products (GDP). According to information availed to The Guardian, the government reached the decision based on the significant contribution of the sugar industry to economic development and enabling Tanzania to become a regional exporter.

 

“The government has taken this matter with utmost seriousness because of the underlying massive interest of the sugar industry and its impact to the overall economic development,” a senior official in the Ministry of Agriculture, Food Security and Cooperative said. Sources in the ministry said the government resolved to endorse the establishment of a sugar importation entity, committing also to improve its regulatory framework in order to promote effective protection of the local sugar industry.

 

The Guardian could not independently verify whether the entity comprising sugar producers has been established as efforts to seek confirmation from the minister and his deputy and permanent secretary did not bear results. Sources highlighted further that the government agreed that the consortium be in charge for importing Gap (home consumption) sugar based on actual, verifiable and auditable requirements.

 

In its latest decision, the government has ‘put on ice’ its earlier stance to safeguard local sugar companies by approving importation of over 80,000 tonnes of sugar to meet domestic demand. “This decision was supposed to be made by the consortium and not the government,” a sugar industry expert told The Guardian in an interview yesterday. “It’s a bit disappointing to note that the very decision that took over seven years to reach and has not even been executed yet we’re seeing a different decision made… the ‘white gold’ industry is going from bad to worse,” he added.

 

The expert maintained that while the just-ended stakeholders meeting held late last year also recommended that all transit sugar be cleared by relevant authorities upon consultation with the consortium, “the same government is directing release of about 20,000 tonnes of transit sugar to be used to cover the deficit … this is typical confusion.” The source added that while there would be some positivity, like stabilising sugar supply, the consequences are likely to hinder efforts to set up new sugar factories to multiply tax collections and foreign currency earnings.

 

According to the source, there have been no constructions of new sugar factories for the last 45 years and imported sugar is said to be at the centre of the collapse of local sugar factories. It is on record that over US$10 billion has been invested in social services by Tanzania’s sugar industry since privatisation in the late 1990s.

 

While estate cane area has tripled to 50,000 hectares, out grower cane area has quadrupled to 19,000 hectares and sugarcane harvest has also quadrupled to 4 million tonnes a year. Annual sugar production has more than tripled to 320,000 tonnes (equivalent to a staggering US$224 million).

 

The human angle to the story is even more revealing and well worth 

noting; the country’s sugar industry supports in excess of 75,000 jobs or direct employees (over 2,000 in support services) and 15,000 registered outgrowers whose annual income has more than doubled to 50 billion/- since the late 1990s, the corresponding government revenue standing at 100 billion/-. Sugarcane is also the largest industrial agricultural product in Tanzania, contributing 5.2 per cent of the annual gross value of field crop production.

 

“The damage will also include outgrowers, bankers, social security funds and loss of investors’ confidence,” warns Ami Mpungwe, who is the Kilombero Sugar Company Ltd board chairman. He explained that the socio-economic impact and the multiplier effect for the sugar industry’s turnaround and growth trajectory are moribund particularly in job creation, growth of outgrowers’ communities, increased tax revenues, creation and formalisation of other sugar-driven business and overall rural transformation.

 

PSPA’s latest report on the status of the crop’s production and the development of the industry shows that since the Tanzanian market was flooded with the illegal sugar imports, local producers have hopelessly failed to meet their commitments to banks, to suppliers and out-growers, while their capital investments have been suspended owing to cash flow constraints. At a meeting held in Dar es Salaam last month, sugar industry stakeholders, among them major consumers of industrial sugar, agreed on the need to establish a new sugar importation mechanism to translate the spirit into action.

 

Delegates to the meeting included representatives of TSPA – whose members are Kilombero Sugar Company Ltd, Mtibwa Sugar Estates Ltd, TPC Ltd and Kagera Sugar Ltd – as well as the President’s Delivery Bureau, Confederation of Tanzania Industries, Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA), Coca-Cola Kwanza, Nyanza Bottlers Co. Ltd, and the CEO Round Table.

 

Sugar producers in Tanzania have reiterated their stand on what they see as daunting challenges that could force them to close shop unless the government heeds their appeals for a ready and reliable market vis-à-vis the “flood” of untaxed or smuggled and therefore cheaper imports. But they have insisted that they are only trying to help the government and the nation monitor the sugar industry more effectively and are not inherently against importation or particular importers.

 

A stakeholders’ meeting was held in Morogoro in January 2014, followed by another in Dodoma five months later. Much more inclusive consultative meetings were held in Dar es Salaam in October 2014 and in Morogoro the very next month. A final submission of sugar stakeholders’ concerns and recommendations was eventually presented to the government through the then Agriculture, Food Security and Cooperatives minister, Christopher Chiza.

 

After extensive discussions and deliberations, the minister approved the stakeholders’ proposals through his letter dated December 22, 2014 as a way forward in efforts to rescue local sugar companies from falling victim to the man-made crisis. The government’s approval provided huge relief to the sugar industry and laid the foundation from which the country’s sugar sector could thrive and bring the country back on track for self-sustenance of the product.

 

However, only weeks after the approval was granted, the same ministry (Agriculture) has made a U-turn by reinstating the sugar importation mechanism previously in existence and through which the sugar industry was under continuous threat of collapse. This move have left stakeholders in the industry wondering if the government is really determined to see its vision of self-sustenance in sugar supply realised.

 

Such a U-Turn in a strategic and crucial sector like this one is likely to send frightening signals to the public that some officials make decisions that do not prioritise national interests accordingly.