Uganda challenges Kenya’s 300% excise duty hike on imported sugar 

UGANDA – Uganda’s sugar industry has opposed Kenya’s decision to increase excise duty on imported sugar by more than 300%, warning that the measure could significantly affect one of Uganda’s largest export sectors and undermine regional trade integration under the East African Community (EAC). 

The Uganda Sugar Manufacturers Association (USMA) has written to Uganda’s Ministry of Trade and the Ministry for East African Community Affairs, requesting urgent government intervention and dialogue with Kenya before the new tax takes effect on July 1. 

Under Kenya’s Finance Act 2026, signed into law by President William Ruto, excise duty on imported sugar has increased from 7,500 Kenyan shillings per tonne to 40,000 Kenyan shillings per tonne.  

Ugandan producers argue that the more than fivefold increase will make their sugar uncompetitive in Kenya, which remains Uganda’s largest regional export market and imports nearly 100,000 tonnes of sugar annually. 

USMA Chairman Jim Mwine Kabeho said the decision would disrupt Uganda’s sugar exports and contradict the principles of free trade promoted under the EAC framework. He argued that the tax amounted to a non-tariff trade barrier introduced through domestic taxation measures. 

Industry representatives warned that reduced access to the Kenyan market could result in weaker demand, rising sugar inventories, declining revenues and lower export earnings.  

They added that Uganda’s sugar industry supports thousands of sugarcane farmers, creates substantial employment and contributes significantly to the country’s foreign exchange earnings.  

According to stakeholders, prolonged export constraints could reduce production, lower cane prices, discourage investment and affect jobs across the value chain. 

The latest dispute revives a long-running disagreement over sugar trade between the two neighbouring countries. Kenya permitted duty-free sugar imports from Uganda in 2011 to address domestic supply shortages.  

However, authorities later alleged that some traders re-exported sugar from third countries under Ugandan origin claims to benefit from preferential treatment, resulting in import restrictions in 2014 that later expanded to other agricultural products. 

Both governments have since worked through bilateral negotiations and EAC mechanisms to remove trade barriers. In August 2025, trade ministers agreed that qualifying products should be treated as intra-regional transfers rather than imports.  

At the March 2026 EAC Summit in Arusha, member states also committed to eliminating tariff and non-tariff barriers by June 30, 2026. 

Uganda’s Ministry of Trade and Industry confirmed that President Yoweri Museveni had been briefed on the matter, while Trade Minister Sanjay Tana has written to his Kenyan counterpart requesting immediate discussions.  

The ministry said Uganda intends to resolve the issue through bilateral engagement and EAC processes rather than retaliatory measures. 

Kenya has defended the tax increase, with President William Ruto stating that the policy is intended to protect the country’s 17 operating sugar mills, nearly two million farmers and approximately ten million people who depend on the sugar industry. 

Meanwhile, Ashish Monpara, Chairman of Modern Group of Industries and a member of the Uganda Sugar Council, warned that higher taxes could increase sugar prices in Kenya, reduce consumption and negatively affect sugar industries in both countries. 

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