Ugandan sugar manufacturers have protested over a new Excise Duty that the Kenyan government plans to implement starting July 1. This change will see the tax on imported sugar rise significantly, from Kshs7,500 ($60 or Shs21,400) per ton to Kshs40,000 ($308 or Shs1.1 million) per ton.
The manufacturers have informed the First Deputy Prime Minister and East African Affairs Minister, Ms Rebecca Kadaga, that the new levy contained in the Finance Bill, 2026, passed by the Kenyan Parliament and awaiting the President’s signature to become law, poses a high threat to Uganda’s sugar industry.
In the June 20 letter seen by this Newspaper, the disgruntled manufacturers under the umbrella of the Uganda Sugar Manufacturers Association (USMA) implored Ms Rebecca Kadaga, the East African Affairs Minister, to immediately intervene and save the development that will deprive them of the current Kenyan market that consumes up to 100,000 tons per year.
The letter copied to Minister of Trade, Industry, and Cooperatives (MoTIC), and his Finance, Planning, and Economic Development counterparts, the USMA members led by their Chairperson Jim Mwine Kabeho, said: ‘Prior to this effective 1 July 2023, the Kenya Revenue Authority (KRA) imposed an excise duty of KShs 5,000 per ton (approximately USD 38.5 per ton). Subsequently, this duty was increased to KShs 7,500 per ton (approximately USD 60 per ton).’
When contacted, officials from the Trade Ministry confirmed the development, which they said Ugandan authorities have started an engagement with their Kenyan counterparts.
The Ministry’s Commissioner in charge of trade, technology, and innovations, Mr Dennis Ainebyoona, said that the Trade State Minister Gen Wilson Mbasu Mbadi has already escalated the matter to the Kenyan authorities, waiting for the responses.
Kenyan President William Ruto told reporters at State House on June 23 that the excise duty increment from Kshs7.5 to Kshs40 on a kilogram of sugar is aimed at safeguarding 17 operational sugar industries and the livelihood of two million farmers and 10 million Kenyans whose livelihood depends on sugar.
Impact
Mr Kabeho said that the proposed increment, once implemented, will have a severe implication on Uganda sugar, including reducing competitiveness of Ugandan sugar in the Kenyan market, and restriction of market access contrary to the spirit of regional integration under the East African Community (EAC.
The increment, he added, will also lead to loss of export opportunities for Ugandan sugar manufacturers, reduce foreign exchange earnings and investment returns within Uganda’s sugar sector, and as well have a potential disruption of the livelihoods of thousands of sugarcane farmers and workers who depend on the sugar sector.
‘This is more than a double increase in taxation. Kenya is now using tax to block our sugar from entering their country because it is going to be so expensive for Kenyans to buy Ugandan sugar,’ he told the Monitor in a telephone interview yesterday.
Mr Ashish Monpara, the chairman of the Modern Group of industries and a member of the Sugar Council, said that the tax increment will have a direct impact on the consumers, which will affect the manufacturers and the entire sector since the demand will go down.
‘Higher prices are likely to reduce consumer demand, impact sales volumes, increase working capital requirements, and place additional pressure on an industry that already faces rising production costs,’ he said
He added, ‘We are closely studying Kenya’s new tax measures. If the increased duty is targeted at imports from outside the region, it could strengthen the competitiveness of Ugandan sugar in the Kenyan market. However, if it applies to Ugandan exports as well, it would reduce our competitiveness and affect regional trade. We hope all EAC member states continue to support free regional trade while protecting their industries in a balanced manner.’
Although he was not privy to the letter, Jim Mugunga, the Finance Ministry spokesperson, is aware that under the East African Community, there are agreements that have been reached that are intended to enable open trade and minimize protectionism.
‘…that matter can be handled by the Ministry of Trade and the Ministry of East African Community Affairs through the existing protocols to resolve the matter.’
Efforts to get a comment from the Ministry of East African Community Affairs were futile as the Minister’s phone was off since she is said to be in Arusha, Tanzania, and that of the ministry spokesperson
In August last year, Ugandan officials led by Gen Mbadi and their Kenyan counterparts, led by Cabinet Secretary for Investments, Trade, and Industry Lee Kinyanjui, agreed to eliminate all existing tariff and non-tariff barriers hindering cross-border trade between the two countries.
During the August 29-30, 2025, meeting, the ministers directed that all products originating between Kenya and Uganda to be treated as transfers and not imports, committing to fully implement all trade-related commitments under the EAC treaty and protocols.
Mr Kabeho said that this development appears to be reversing the gains leading to reduced competitiveness of Ugandan sugar in the Kenyan market, restricted market access, loss of export opportunities, reduced foreign exchange, and potential disruption of the livelihoods of thousands of Ugandan sugar farmers.
Starting in 2011, when Uganda was allowed to import duty-free sugar to address the shortage that it was experiencing, Kenya and Uganda have been involved in a sugar war, with Kenya accusing Uganda of importing more of the duty-free sugar, repackaging it as Ugandan-manufactured sugar, and dumping it in Kenya under the cover of the East African community free movement of goods and services protocol.
In 2014, Kenya blocked Uganda’s sugar from entering its territory before other products, such as eggs, maize, and milk, followed suit.
‘We wish to note that the previous increases in excise duty on imported sugar have been raised on several occasions, including during the 46th and 47th Sectoral Council on Trade, Industry, Finance and Investment meetings under the East African Community framework held in Arusha plus the 25th Ordinary Summit of the East African Community Head of State on 7th March 2026 Arusha, United Republic of Tanzania where it was agreed that all outstanding non-tariff and tariff barriers to trade be resolved within the community by 30th June 2026. Despite these resolutions, the matter remains unresolved and continues to escalate,’ he said.
Mr Monpara, who is popularly known as the King of Ugandan sugar, said that sugar is a basic household commodity consumed by millions of people every day, and that explains why many countries either do not impose excise duty on it or keep such taxes relatively low because it is considered an essential food item.
‘A significantly higher excise duty risks increasing the cost of living for consumers while reducing the competitiveness of the domestic sugar industry. We therefore hope there will be continued dialogue between the Government and industry to ensure that revenue mobilisation is balanced with affordability for consumers, the competitiveness of local manufacturers, and the long-term sustainability of the sector,’ he said.
In Uganda, the sugar industry is one of the largest agro-industrial sectors, supporting hundreds of thousands of farmers, creating thousands of direct and indirect jobs, and contributing significantly to the economy.
‘As manufacturers, we remain committed to investing in Uganda, supporting farmers, creating employment, and contributing to the country’s economic growth. If the increased duty is applied to all imported sugar, including imports from Uganda, Ugandan sugar will become more expensive in Kenya,’ Mr Monpara said.
According to the Observatory of Economic Complexity (OEC), a detailed global trade data analyser, Uganda remains among Kenya’s major export destinations with an increment of exports growing at 1.27 percent from $893M in 2019 to $951M in 2024. Uganda’s exports to Kenya, however, remain low from $399M in 2019 to $527M in 2024.