Consumers are set to pay more to buy sugar following the introduction of a new tax on the sweetener.
Sugar prices will rise from this month on imposition of a levy intended to provide billions of shillings to fund a raft of interventions as the government moves in to revive the sector.
Agriculture and Livestock Cabinet Secretary Mutahi Kagwe said that the Sugar Development Levy (SDL) will come into force starting May 21, at a rate not exceeding four percent on value of both domestic and imported sugar.
This (levy) is set to trigger a rise in retail prices from the current average of Sh166 per kilogramme, as sellers and importers pass on the increased costs.
Kenya’s sugar sector has been ailing for years with companies shutting down amid mounting debts to farmers, prompting introduction of a levy to raise billions of shillings that will among others fund upgrading of the dilapidated factories, development of quality sugar cane and finance farmers’ groups.
“This Order may be cited as the Sugar (Sugar Development Levy) Order, 2025 and shall be deemed to have come into operation on the 21st of May 2025,” CS Kagwe said in a draft notice.
Sugar is nearly a must-have for most families and an increase in its price squeezes the budgets of homes, notably those in the low-income band.
Mr Kagwe invited Kenyans to scrutinise the levy and submit proposals from last month, to clear the path for its introduction.
Prices of sugar have jumped by an average of Sh57 per kilogramme or 50 percent since 2020, according to data from the Kenya National Bureau of Statistics. The spike is mainly attributed shortfalls in domestic production, leading to importation of costly sugar.
Firms are allowed to import duty-free sugar from the Common Market for Eastern Africa to plug deficits in local production. The shipments are done within a period gazetted by the CS for Agriculture.
Local production of sugar has gradually increased in the past four years from 603,788 tonnes in 2020 to 815, 454 tonnes last year, a rise of 35 percent. The growth has however failed to match a growing domestic demand, prompting the State to regularly open the duty-free importation window.
Millers including Mumias, Chemelil and Sony have remained non-operational in the past few years, hitting farmers as fortunes.
The struggles prompted State interventions including leasing of the firms, writing off debts estimated at over Sh100 billion and now imposition of the SDL to jumpstart the sector.
The Sugar Act, 2024 says that 15 percent of the SDL collections shall be used to rehabilitate the sugar factories, a similar percentage will go to develop infrastructure in sugar-growing areas.
