Sugar importation scam emerges again

Sugar scam
Sugar scam

28th April 2013


Opposition calls for halting of all importation permits but will the government bell the cat?

Who is fooling who between local sugar producers and sugar importers?
That’s the question when Tanzania’s current sugar production capacity stands at 320,000 metric tones but actual demand a year is 480,000 metric tones for both household and industrial uses, meaning there’s a deficit of about 160,000 metric tones yearly.

In 2011/12 Tanzania’s annual sugar consumption stood at 480,000 tons but the country’s main producers — the Tanganyika Plantation Company (TPC), Kilombero Sugar Company Ltd in Morogoro region, Mtibwa Sugar Estates also in Morogoro and Kagera Sugar Ltd in Kagera region — only manage to produce an average 400,000 tonnes.

In 2011 SBT outlined nine projects whose implementation would see the country triple its annual sugar production by 2016. But for some years now, the local sugar producers have accused the government of granting duty free sugar importation, saying such move kills the local sugar sector.

To local sugar producers, the data given about the sugar deficit in Tanzania are inflated just to serve the ‘greedy’ local sugar importers who also smuggle the very same amount of duty-free sugar to neighbouring country.
In their defense, the importers claim that given the current conditions, the local sugar producers cannot meet the demand and that’s why the price of the commodity has been surging out of reach every year to many consumers especially in the rural areas.

The importers also accuse the local producers of forming cartel to ensure that their profit margins remain high.

Depending on who you talk to, the truth behind the sweet, but toxic commodity in Tanzania is there to stay at least for another next five years.

But, this week as the government ponders how to raise revenues to finance various development programmes including the rejected budget for the Ministry of Water, official opposition leader in Parliament Freeman Mbowe wants the government to halt all sugar and rice import permits to save local industries and farmers.

Last year, Tanzania was forced to temporarily lift a ban on rice imports and allow traders to import 60,000 tons of rice to curb the shortage.

In his brief statement availed to the media on Friday Mbowe said investigation they conducted in the course of implementing the party’s Movement for Change (M4C) initiative across the country revealed a different picture from what the government stated in an attempt to justify its decision to grant the permits to traders.

The opposition leader, who also doubles as Chadema national chairman, said the situation on the ground revealed that sugar factories – Kilombero Sugar, Mtibwa Suga, Kagera Sugar and Tanganyika Plantation Company (TPC) in Moshi – had bags full of sugar in their warehouses while cheap imported sugar flooded the local market.

He said the same applied to rice whereby farmers in the regions have missed the market following massive importation of the product from outside Tanzania such as Pakistan and Vietnam.

According to Mbowe, imported rice was cheaper because farmers in countries of origin were subsidised by their governments.

He said such permits have had negative impacts on local sugar industries and on life of common farmers, including sugarcane growers simply because the demand for sugarcane as raw materials for such local industries had since gone down.

Mbowe said in all places they toured for the implementation of M4C initiative, rice growers complained of lack of markets for their commodity.

The M4C is an initiative crafted by Chadema leaders in their attempt to propagate party policies and also to publicise the opposition party countrywide through public rallies.

“These permits are frustrating not only our country’s economy but also our local sugar industries and farmers are hit hard as well. They must be stopped forthwith,” he said.

According to Mbowe, farmers who resorted to take their rice to the market to compete with the imported one incurred huge losses as they could not recover their production costs.

Mbowe said since such sugar and rice imports were not taxed the impact on the national economy was even bigger….first, the nation gets nothing in tax from the imports as they are tax free, secondly, local industries as well as farmers are hurt,” he said.

He said local farmers who borrowed money from banks are now finding themselves in serious trouble to repay the loans as the production costs incurred are not recovered.

Mbowe hinted that there was a possibility some officials in the government and the ruling Chama Cha Mapinduzi were benefiting from the permits granted, calling for proper scrutiny on their mode and criterion of issuance.

When winding up debate for the budget speech of the Ministry of Agriculture, Food Security and Cooperatives on Tuesday, Deputy Minister Adam Kigoma Malima said the decision to grant import permits to traders was made to cushion the price of the two commodities in the market.

Malima also said a tendency had emerged whereby farmers had begun hoarding rice waiting for its price in the market to rise. He said such a strategy caused shortage of the valuable food in the market, prompting local traders to hike its price.

“We, as the government could not stand aside and watch. We had to issue permits to traders to import the commodity to alleviate the situation in the market,’ Malima was quoted as telling the House on Tuesday this week.

It would be recalled that Former Minister of Trade and Industries Iddi Simba resigned on November 5, 2001 after it was realized that he abused his powers by issuing sugar import permits to traders under dubious circumstances.
However, Simba later said he had had to resign to ‘demonstrate his political maturity’ and to save the government from being defeated by a vote of no confidence in Parliament.

The inquiry had followed a motion tabled by former Kwela MP Chrisant Mzindakaya who attacked Simba in the House for issuing sugar import licences ‘indiscriminately’.

The Commission recommended repeal of Government Notice Number 301 of 2000 which had given the Minister for Industry and Commerce wide powers to register any person to import sugar. He was reported to have authorised 44 companies, instead of only 10 gazetted on August 2000 to import sugar.

The enquiry concluded that the import licenses were issued in an environment surrounded with circumstantial evidence of graft.

On November 23, 2001 former President Mkapa surprised many when he appointed former Minister of Natural Resources, Tourism and the Environment Dr Juma Ngasongwa to replace Simba in this key cabinet post.

Ngasongwa had himself resigned in December 1996 after he had been mentioned in Judge Joseph Warioba’s Corruption Commission which had probed a scandal involving the allocation of hunting blocks.

In 1996, Mzindakaya raised another alleged scandal which saw the resignation of the then Finance Minister Prof Simon Mbilinyi.

Statistics released by the Sugar Board of Tanzania (SBT) last April showed the country’s sugar demands per year was 480,000 tonnes but the four industries production capacity stood at a paltry 320,000 tonnes.

Published: Zarai Media Team





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