Kibos Sugar is set to relocate its industrial sugar refinery plant to Rwanda following the Kenyan government’s failure to grant it special economic status, allowing duty-free export of its products as it targets the regional market.

Despite completing the construction of the Ksh200 million facility over five years ago, Kibos has been unable to commission it due to stringent trade laws governed by the East African Customs Management Act.

The firm can only evade duty if it is gazetted as a special special economic zone.

A senior official from Kibos disclosed that they have secured land within Rwanda’s special economic zone for the potential relocation.

“We are planning to relocate the plant to Rwanda where we have been allocated land by the government within the special economic zone,” the official stated.

The decision to relocate poses a significant setback for Kenya, a nation that has positioned itself as a prime investment destination.

Under the EAC customs regulations, goods produced from duty-free imported raw materials do not receive preferential treatment when exported to member countries, thereby incurring taxes.

This circumstance contrasts with the current scenario wherein EAC member states can import refined sugar at zero tariffs, meaning if Kiboss were to export, their product would be uncompetitive in the market.

Kibos, the sole company with an industrial sugar plant in Kenya, would be compelled to import raw sugar from countries like Brazil or India to facilitate the refining process. J

ude Chesire, Head of the Sugar Directorate, said while they have provided support to Kibos, resolving duty-related issues falls within the purview of regional trade ministers.

Kenya, a net importer of refined sugar primarily used in confectionery and beverage production, imports up to 150,000 tonnes annually to meet domestic demand.

The milling plant in Kisumu boasts an installed capacity of 150,000 tonnes, sufficient to cater to the country’s annual requirements.

gandae@businessdayafrica.org