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Tanzania Government Seeks to Liberalise Sugar Imports to End ‘Sugar Gap’

The Minister believes that liberalizing importation of sugar will increase competition and reduce the risks associated with oligopolies.

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The Minister for Agriculture, Hussein Bashe, announced that the government is planning to table legislative amendments in the upcoming parliamentary sessions to liberalize sugar imports that will end protectionism for local producers as a move to tackle the sugar shortage.

Bashe made this announcement during a meeting with editors convened by the State House Presidential Communication Directorate on President Samia’s state visit to the Vatican, Norway, and Ethiopia.

The sugar market in Tanzania is an oligopoly by nature dominated by seven domestic producers who, according to the law, have exclusive rights to importation during the sugar shortage.

The government’s announcement comes amid the ongoing sugar crisis, where retail sugar prices have increased from an average of 2,500 Tanzanian shillings in November last year to between 4,500 and 6,000 Tanzanian shillings per kilogram.

The government attributed the price hike to disruptions that affected domestic producers’ ability to meet the country’s demand.

Initially, El Niño rains were blamed, but over time, the government has attributed the blame to traders for creating an artificial shortage and selling sugar above the price cap.

Current domestic producers in Tanzania produce an average of 1,000 tonnes per day against national requirements of 1,500 tonnes per day. This gap has necessitated the importation of sugar from external producers.

The sugar industry is among the strongly regulated industries that protect domestic producers against external competition. 

The Minister believes that liberalizing importation of sugar will increase competition and reduce the risks associated with oligopolies.

“Enough is enough; we have protected you for a long time,” said Bashe, who doubles as Nzega Urban MP. “We are going to liberalize the sugar business so that we can have competition.”

In line with this measure, the government will not grant special sugar import permits to domestic producers during shortages. Already, the 100,000-tonne import permit issued at the end of last year has been granted to a government agency, the National Food Reserve Agency (NFRA) , instead of domestic producers.

According to Bashe, this decision will shake the ‘big boys,’ but will ensure competition and stability without undermining domestic producers, as the government will continue to incentivize them through the Tanzania Investment Center.

Another measure taken by the government to improve the efficiency of the sugar industry is to order domestic producers to reduce bureaucracy in supplying sugar. The Minister cited examples of Kagera Sugar Limited maintaining one dealer serving eleven regions, which he deemed dangerous to have a monopoly distributor.

“This is unacceptable; we have ordered all producers to open depots in all regions to break the supply chain dominated by a few individuals,” said Bashe.

The government has also planned to import 300,000 tonnes of sugar this year, in addition to the issued importation permit of 100,000 tonnes. This decision anticipates a shortage due to unreliable weather conditions.

As of now, only 31,000 tonnes of imported sugar have arrived and been distributed out of the 100,000 tonnes, with the government expecting to reach 60,000 tonnes of imported sugar by mid-March 2024.

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