Tanzania wants to opt out of a Southern African Development Community (SADC) provision allowing for open access to member states’ sugar market.
“Many of the SADC countries, including Swaziland, Zambia and Malawi are surplus producers, so, because of the fact that in the European market, the concession has now ceased, they are looking to supply their sugar in our market. East Africa is a big market for them,” Henry Semwaza, Director General at Sugar Board of Tanzania said in an interview recently in Dar es Salaam.
The government is seeking an extended derogation from a SADC law permitting duty-free access of sugar markets among member countries in a bid raise domestic competitiveness and prevent dumping by larger producers after African export quotas to EU end in September 2017.
“We are in SADC, yes, but despite the fact that the SADC protocol on trade requires sugar to come at zero tariffs into our country, what we are saying is we need time for us to grow also,” he said.
He said, “If you bring in sugar at zero tariff, the local industry won’t grow, it will be stagnant.”
Tanzania currently has derogation for six months but “putting up fresh on our application some more facts to back up the application so that we can be given three years, four years, five years to revamp our production so that we can compete with them,” Semwaza said.
“Our market will improve when we are able to supply it sufficiently. We have to be allowed time for the industry to grow just like Uganda has done,” he said.
Tanzania is a net importer of sugar sourcing as much as 290,000 tonnes of both domestic and industrial sugar annually from outside, according to a sector outlook report handed out by Semwaza.
An annual local output of 304,007 tonnes in 2014/15 is expected to increase to 328,416 tonnes in 2015/16 and hit 470,000 tonnes in 2019/20, the report states.
The East African country is expanding available capacity, encouraging medium processing plants of about 10,000 tons per annum and improving the business environment for investors to come into the country.
“We are promoting the small plants vigorously. The big projects will be subject to availability of land and inclusion of small-holder out-grower,” Semwaza said. “Currently our focus is to be self-sufficient in direct consumption. We want the country to meet the demand of the people on the table sugar after that, investors will be encouraged to put up plants to cater for increasing demand of industrial sugar,” he said.
The government will likely slash withholding tax on agriculture to 10% from 30% this year as it seeks attract investment in the sugar sector, Semweza said.
“But then, land has always been a bottleneck. Land that is free in our country is an uphill task. We are going to engage the government and other stakeholders in the coming horizon to ensure that everything is done to get land for green field sugar projects,” Semwaza said. “That has to happen for us to be self-sufficient. If we get 2-3 large green field projects we will wipe out the deficit”
Sugar cultivation in Tanzania currently occupies as much as 60,000 hectares of land, according to the Board. At least 18 new sugar projects are earmarked for commissioning in the next 5 years, the report shows.
Tanzania is trying to end illegal imports which distort the market and scare investors, according to Semwaza. “In the last three years, our market has been distorted by illegal importation of sugar which is being brought by surplus sugar producers in the world. So one of the things which we are going to do attract investors is to ensure that the fight against illegal activity is a continuous fight by all government organs,” he said.
While many investment incentives exist in the country, “they have to be made transparent,” Semwaza said.
At least 300,000 Tanzanians derive their livelihood from Sugar. Registered sugar growers are 24,000, according to the board.
Average demand for sugar in the East African region is growing at 3%, Semwaza said.
Tanzania is East Africa’s second-largest consumer of sugar after Kenya.
East African Business Week.