Kenya needs to urgently reform its inefficient sugar sector - a major employer in the country's impoverished west - before 2008, when the industry will face a flood of cheap imported sugar, a World Bank economist said on Tuesday.
Kenya currently allows only 200,000 tonnes of sugar to be imported under the Common Markets for Eastern and Southern Africa (COMESA) zero tariff system. The system will end in February 2008, paving the way for unlimited importation of sugar which, experts say, will undermine the country's struggling sugar industry.
Kenya currently produces 400,000 tonnes of sugar and consumes 600,000 tonnes, with the deficit coming from importers.
Over 100,000 small-scale farmers are engaged in growing cane in western Kenya, making the industry the major employer in a region where most people live on less than a dollar a day, World Bank economist Donald Mitchell told a conference in Nairobi.
The economist said in a report that Kenya would have to reduce the high costs of production for the industry to become competitive.
"Domestic sugar prices are about 50 percent higher than imports after all fees and levies are paid ... Sugar prices will need to decline about one third to compete with imports," he said.
Cane yields must be increased to allow sugar production costs to fall and sugar factors privatised, he added.
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