EAC STATES URGED TO STOP EXTORTING THEIR RAW MATERIALS TO THE DEVELOPED NATION AND TO START PROCESSING THEM LOCALLY.

By Leo Odera Omolo.

Information is sourced from EAC/EABC Secretariat and EASTAFRICAN

The five member states of the East African Community (EAC) were recently urged to stop exporting raw materials in their crude form so that they are processed locally to create employment opportunities.for their citizens.

By doing so East African region hopes to exploit its production muscle to increase investments in its manufacturing and value addition sectors.

Business executives and public planners who gathered at Kigali, Rwanda at the first East African Investment forum urged the EAC to develop policies and strategies that prohibit the export of produce that can be viably processed in the region, in order to promote value addition.

This is envisaged to correct an imbalance that lies between attracting investment in these sectors, and the preference by farmers to fetch premium prices for organic commodities from American and European markets, rather than sell them at lower prices to local infant factories.

The participants further urged the governments to create avenues for import-subtraction of some raw materials currently obtained from outside the region, for instance, by developing backward and forward linkages for relevant industries like Breweries.

This is similar to what enterprise Uganda is doing through its business linkage programme where they have formulated relationship between large companies and their suppliers.

For instance, a farmers association producing wheat and barley in Kapchorwa, Eastern Uganda and East African Breweries, the biggest buyer of those communities in the country.

The proposal came up while Investment promotion agencies show cased Investment opportunities available in the region such as value addition in the coffee sector in any of the five EAC countries of Kenya, Uganda, Tanzania, Rwanda and Burundi.

Other Investment show cased include banana processing, mineral and energy development, communication, finance and tourism.

According to the World Bank Investment report, Foreign Direct Investment (FDI) in to East Afrca has increased from less than USD 1 billion in 2000, to just above USD 3 billion in 2006, maintaining this region as the Least recipient of FDI in Africa compared to regions such as Central Africa with USD 6.2 billion and WestAfrica USD.6.8 all between 2005 and 2006.

Mr. Charles Mbogori, a Kenyan Executive Director of the East African Business Council sand “In the Interim, there are Interim, there are Initiatives to market the region as one; which include various tourism promotion activities and joint Investment Missions in Africa and overseas. For example, the EAC trade mission in Sweden and energy mission in Munich both in late 2007”

The optimism for the strategy to work comes from the fact that East Africa as a region has a globally competitive production capacity of sought-after commodities and minerals.

For example, Uganda is the second leading producer of Coffee in Africa, ad leads globally in growing robusta coffee and consumer bananas. Kenya has for long been among the leading producer of pyrethrum in the world, and produces the most tea in Africa.

Tanzania on the other hand, is among the leading producers of sisal and minerals like Gold and Diamonds in Africa, while Rwanda is gradually positioning itself as the leading producer of speciality coffee in Africa.

The secretary general of the EAC, Ambassador Juma Mwapachu told the conference that Tanzania has 44 million acres of arable land, but it is using only 20% of it. So if we reorganize our land use to increase production, we can produce much more.

Susan Kikwai, the managing Director of the Kenya investment authority, told the conference that unless five member states of the regional trading bloc*EAC} increased access to energy by 50% by year 2015, it may not achieve its development goals.

She said in her presentation that only about 10 % of schools, clinics and hospitals in rural areas have access to electricity. Her presentation to potential investors was meant to help the delegates focus on the energy situation in the sector through public, private partnership and foreign investment.

President Mwai Kibaki told the delegates that in his country demand for power had increased both in Industrial sectors and domestic sectors.

“Given the current trends, we need to urgently increase investments in additional power production. The Kenya government is therefore implementing several projects to generate up to 600 additional megawatts of power by the year 2012.

“We are also putting in place resources to generate up to 2000 megawatts of power by the year 2030 from geothermal source.”

In addition to national efforts said President Kibaki, there is need to aggressively push the agenda of regional electricity integration through power pools. This integration would enable the region to accelerate growth and expansion of the electricity sector and facilitate the provision of quality electric power at affordable tariffs.

President Yoweri Museveni of Uganda told participants that his government had set up USD 215 million Energy Fund to build Bujagali Hydro Power dam. The dam will yield about 250 megawatts.

“The construction of another dam-Karuma-would start by the end of this year therefore as for as energy ic concern Uganda will never be in deficit again. We hope to soon build a heavy fuel and gas electricity station in Homa using our oil,” said President Museveni.

Te Kigali Investment Conference brought together some 800 business leaders from within the EAC member states of Tanzania, Kenya, Uganda, Burundi and Rwanda and from outside the region.

The Executive Director of the EABC Charles Mbogori told participants that the perception of the community member states by the rest of the world is currently poor and urgently needs spring up.

“The region needs to respond positively to the challenge related to corruption, as it affects the business climate in the region,” said Mr. Mbogori.

Anti-corruption bodies in the EAC member states recently formed an association which needs to address the substantive corruption issues that the region faces.

According the Transparency International is rating the EAC countries far badly in the corruption perception index.

In 2207, Kenya was the worst among the EAC countries at position 150 out of the 180 nations surveyed. This rating is as bad as countries facing stability problems in Africa, including Congo, Liberia, Cote D’ivoire and Sierra Leone.

Tanzania leads in the region as the least corrupt country in the Transparency International Survey, taking position 94 out of 180, followed by Uganda at number 110, Rwanda at 111 and Burundi taking position 134.

There is a lack of commitment to policies reached at the EAC level, manifested in Unilateral decision that are still taken by some states, without the due consultation with an affected stakeholders.

“The cases of the plastics and the motor vehicles manufacturers Industries come to mind,” said Mr. Mbogori adding that any unilateral decision works against investment, as a major guiding factor on investment decision is predictability of policies.

End.

Leooderaomolo.

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RUTO’S ACTIONS HAS GIVEN HOPE TO THE IMPOVERISHED SUGAR CANE FARMERS.

By Leo Odera Omolo

William Ruto, Kenya’s Minister for Agriculture is the man of the year as thousands of poverty stricken sugar cane growers now bank their hope on his move to turn around the ailing sugar industry.

As part of his blue print to turn around and resuscitate the industry, the minister will be asking the government to write off the Kshs. 47 billion accumulated debt sugar factories have been grappling with.

Ruto will also be asking the government for billions to re-coup ailing sugar factories.

It has been reported in the media that Ruto will be traveling to the coastal city of Mombasa later this week to witness the destruction of 47 containers of illegally imported sugar into the country. The sugar is currently detained at the port by the hawk eyed Kenya Revenue Authority officials.

Ruto says this is part of his long term plan and determination to protect cane farmers and Kenyan workers from exploitation by unscrupulous sugar barons..

Plans are also a foot to modernize and improve the cane crushing capacity of the various factories,. He wants factories that can crush 15,000 tonnes per day. Currently majority of factories crush below 3,000 tonnes daily. Only Mumias, which is already privatized is doing extremely well and crushing more cane and turning out thousands of tones in a day

“Our sugarcane matures in 12-24 months. But even now, sugar cane that is 48 months old is still lining up to be crushed. Farmers cannot opt for the fast maturing variety because even the one that takes long cannot be crushed.” The minister was last week quoted extensively by the SUNDAY STANDARD.

Kenya has nine white sugar manufacturing factories, but nearly all of them are based in

western Kenya.
These are Mumias, Nzoia, Western Sugar Company. All based in

Western Province.
Other factories include the Awendo based Sony Sugar Company,

Chemelil,
Muhoroni, Kibos and Soin SugarFactory which is based in Kericho, though smaller ones than
the rest.here is also Miwani Sugar Mill, which is the oldest factory in the country.

Built in 1927. Miwani is currently under the joint official receivership. Its production came to a halt about ten years ago.

All the nine factories produce a combined figure of 500,000 tonnes annually. The national consumption in the country is estimated at about 750, 000 tonnes every year. There is a shortfall or a deficit of about 250, 000 tonnes which Kenya can Import from the Comesa region.

” But a lot of sugar is coming in to the country disguised as fertilizers, cement, pasta and rice. All these products are zero-rated. We want to stop that practice,” says Ruto.

Until now the rule has been that those caught importing sugar illegally are allowed to sell it after paying q100 % duty. Ruto has stopped that. He has cancelled all lincences for sugar importers and exporters alike. He reasoned that sugar has no sugar surplus to export.

What these importers have been doing says the minister, is to bring Sugar from outside COMESA region, flood the market with it, killing local factories who in turn declare Kenyan workers redundant.

Some of these imports is what the minister will destroy in Mombasa this week.

Sugarcane farmers in the Nyanza sugar belt, however, have hailed the minister for having taken the bold step in firing the former Chemelil Sugar Company MD Prof. Julius

O. Nyabundi who is credited for having run down the facility.

Prof. Nyabundi’s three year contract expired last month and acting on numerous complaints received by the government Ruto refused to have the former MD’s contract renewed.

Production at Chemelil had dwindled drastically from 3000 tonnes per day down to 1200 per day due to neglect and mismanagement.

Production at the Sony Sugar and Muhoroni Sugar Companies are on the upward trend, though the latter is still under the joint receivership managers.

Reports emerging from Awendo says a major plan for relanding is now planned for the sugar mill in a bid to enable it achieve the necessary visibility and market presence.

Last week the Sony Sugar managing Director Paul O. Odola announced that the factory would close for four weeks to enable the firm’s engineers to lay the ground for the relaunching of the Company. Part of the grand plans lined up by the management include, optimization of the milling equipment which will see Sony crush over 3,000 metric tonnes per day up from the 2,500. The maintenance exercise will also see the installation and commissioning of eight new packaging machines, in a move that would enable the miller to increase the volumes of its packaged sugar.

The revival of the ailing sugar industry, however, requires a lot of dynamism and political magnanimity and bravery. This is because the sugar industry in Kenya for a long time has remained what is commonly known as the “milking cow” owing to high degree of corruption.

Sugar cane farmers have had their share of mistreatment and as this naked theft of their harvested cane by unscrupulous factory managers using defective or deliberately adjusted weight bridges for the purpose of cheating cane farmers and transporters of their hard earned money from cane harvest.

To eradicate this kind of dishonesty on the part of some unpatriotic millers, Ruto should insist on regular checks of weight bridges in order to weed out this kind of cheating which hurts the poor cane farmers the hardest.

Ruto says that a person who lies that this is fertilizer when he knows it is sugar cannot be trusted to import sugar to be consumed by Kenyans. “We have agreed that such people should be charged in court as economic saboteurs, after their crush has been destroyed”

It has been disclosed that Ruto is currently working on a cabinet paper in which he will also be asking for Ksh. 74 billion to turn around the agriculture.

He said he would ask that the Agriculture be allocated with 4.5 per cent of the budget be given to Ministry every year.

The money will be used for agricultural research. He also wants the government to start subsidizing farmers as is done in Europe and in the US.

Political interference by appointing incompetent management staff in the sugar factories are few of the elements frustrating the effort to improve sugar production in the country. This must stop for the country to realize improvement in the sugar sub-sector of the economy.

End.

leoodera@yahoo.com

– – –
Date: Wed, 16 Jul 2008 04:25:47 -0700 (PDT)
From: Leo Odera Omolo
Subject: EAC: Process your materials locally, rather than exporting them; Sugar farmers given hope by Ruto’s actions;