Kenyan consumers are set to face higher sugar prices next month as the government introduces a new tax on the sweetener.
Starting February 1, 2025, a 4 per cent Sugar Development Levy (SDL) will be imposed on both locally produced and imported sugar.
This tax is part of the government’s broader sugar sector reforms introduced under a new law passed late last year.
Agriculture and Livestock Cabinet Secretary Aden Duale recently announced the Sugar Development Levy Order 2025, officially implementing the new charge.
As a result, sugar prices are expected to rise by at least 4 per cent once the levy takes effect.
The decision follows President William Ruto’s approval of the Sugar Act 2024, which gave the Agriculture Ministry the authority to introduce the levy.
Under the new system, local sugar manufacturers will be required to pay the levy to the Kenya Sugar Board (KSB), the regulatory body formed through the recent legislation.
Additionally, sugar importers or their appointed agents based in Kenya will also be required to pay the 4 per cent levy, which will be calculated based on the cost, insurance, and freight (CIF) value of the imported sugar.
The government aims to use the revenue collected from the levy to strengthen the sugar industry.
The funds will support the operations of the Kenya Sugar Board (KSB) and the Kenya Sugar Research Institute (KSRI).
The KSRI is tasked with projects such as stabilizing the industry, funding infrastructure improvements, and supporting research efforts to boost productivity.
The new tax is expected to significantly affect sugar prices in the short term. However, the government predicts a positive outlook for the sector in the coming financial year 2024/2025.
Kenya’s sugar production is projected to increase by about 40 per cent, reaching roughly 750,000 metric tons.
This rise is attributed to the expansion of harvested sugarcane fields after the lifting of a previous ban on sugarcane harvesting.
With increased local production, the country’s dependence on imported sugar is expected to decrease significantly by about 30 per cent, reducing sugar imports to around 455,000 metric tons.
The government has also imposed a separate 7.5 per cent levy on sugar imports under the Tax Laws Amendment Act 2024, aimed at discouraging sugar imports and encouraging local production.
Although higher domestic production could help stabilize sugar prices in the long term, short-term price fluctuations are likely as producers adjust to the new taxation system and operational changes introduced under the levy.
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