East African Business Week

Kampala, Uganda - Consumers continue to pay high prices for sugar as the much anticipated imported sugar comes in small quantities.
 Locally produced sugar costs between Ushs4000 ($1.6) and Ushs6000 ($2.2) with one of the sugar producers accusing distributors of profiteering.
The price of sugar has more than doubled since the beginning of the year mainly because of shortage cane and the increased cost of production.
In the advent of this challenge, the government waived taxes on imported sugar to reduce of the cost and increase the quantity of sugar on the market. This however has not had an impact since importers complain of delays in shipment.
"We have not been able to import more sugar that is why prices are still high. Besides the shilling has been depreciating making it a little more expensive," says Jim Kabeho a director at the Madvhani Group.
The challenge with sugar quotas has been that importers have been taking advantage of the current situation to keep prices up. "The same people distributing and producing sugars are the same who got licences to import.  
 However importers deny this claim and point out that the reason why imported sugar is still expensive is because the orders were placed when the shilling was depreciating against the dollar.
India and Brazil the worlds' largest sugar producers have experience bad weather that has dented the production levels at a time when demand is up.
Kenya, Tanzania and Uganda have been facing sugar shortages and since it is a demand driven the prices kept on leaping as local producers decried poor yields.
Uganda's Trade Minister, Amelia Kyambadde also refutes the allegations that the application process for importing licences was fraudulent. "That is not true. The application process was transparent and you can tell that the prices have begun to reduce," Kyambadde says.
Kyambadde also blames the current state of the economy for the  high prices. She says that importation has been a challenge with less sugar being brought into the market compared the projected orders.
"We have only seen sugar imports of about 15% which is not enough to meet the demand. Once the supply side has been dealt with then prices could go down further," Kyambadde adds.
Uganda's demand for sugar in this financial year is expected to be 371,744 tonnes of sugar yet local production is 350,000 tonnes. This shortfall will continue to create the demand pressure that will keep dragging the price up.
The scenario  is unlikely to change because of the intricacies involved in business of importing goods that have quotas. It is still possible that illegal sugar has made onto the market yet clearance and customs officials have no knowledge of it. The same happens in the business of cigarettes where counterfeits always make it across  borders and eventually to consumers.
The government has had to provide licences only to a few to avoid the flooding in of imported sugar, which when imported in large quantities creates economies of scale and will end up cheaper than the locally produced sugar much to the detriment of outgrowers who are the majority suppliers.
 At the height of the Sugar crisis in Uganda, there was a lot of heckling and accusations that there was collusion in the industry showing a lack of a policy on sugar.
Mini projects are most likely to be the solution to the current challenge instead of the dependence on the few industries that require so many tonnes of sugar at high costs of production. Annually sugar production is supposed to be Kakira 167,000MT, Kinyara 132,000MT and Lugazi 60,000 MT.
However with constraints these targets will not be met but if there were other mini projects, they would add onto the capacity of these bigger projects to meet the demand and create fair prices. Recently the Tirupati Development Company ventured into production of 2,500tonnes of sugar a day from about 9,500acres of land.