Uganda’s sugar manufacturers have raised concerns over Kenya’s new excise duty on imported sugar, warning that the move could undermine one of East Africa’s key export industries, threaten thousands of jobs and strain regional integration efforts.
Kenyan President William Ruto signed the Finance Act, 2026 into law this week, introducing an excise duty of 40,000 Kenyan shillings ($308) per tonne on imported sugar from July 1, up from 7,500 shillings ($58).
The increase, which raises the tax burden more than fivefold, is intended to protect Kenya’s domestic sugar industry. But Ugandan producers say it could make their exports uncompetitive in Kenya, their largest regional market.
The Uganda Sugar Manufacturers Association (USMA) has petitioned the ministries of Trade and East African Community Affairs, urging government intervention over the measure.
USMA chairman Jim Mwine Kabeho said the new duty could significantly reduce the competitiveness of Ugandan sugar and disrupt trade relations established under the East African Community (EAC) integration framework.
“Implementation of this measure is expected to significantly reduce the competitiveness of Ugandan sugar in the Kenyan market and disrupt longstanding regional trade relations,” Kabeho said.
Kenya imports an estimated 100,000 tonnes of sugar annually from Uganda to supplement domestic production. Manufacturers fear the new tax could lead to declining exports, excess stocks, reduced factory operations and lower incomes for farmers.
Uganda’s sugar industry supports thousands of sugarcane growers, provides direct and indirect employment and contributes to foreign exchange earnings, making the sector a major part of the country’s agro-industrial economy.
Manufacturers warned that losing access to the Kenyan market could trigger lower cane prices, delayed investments and job losses across the supply chain.
Kabeho criticised the move as part of a wider trend of protectionist measures, arguing that Kenya was using taxation to restrict regional suppliers despite ongoing commitments to free trade within the EAC.
The dispute revives long-running tensions between the two countries over sugar and other agricultural products. Kenya and Uganda have previously clashed over allegations that foreign sugar was being repackaged and exported through Uganda under EAC trade arrangements.
The disagreements led to restrictions on Ugandan sugar exports in 2014 before extending to other commodities including milk, maize and eggs.
Both governments have since used bilateral talks and EAC mechanisms to address trade barriers. In August 2025, trade ministers agreed that goods originating from either country should be treated as transfers rather than imports, reaffirming commitments under the EAC Customs Union and Common Market protocols.
The issue was also discussed at the 25th Ordinary Summit of EAC Heads of State in Arusha in March, where leaders committed to removing remaining tariff and non-tariff barriers by June 30, 2026.
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Uganda’s Trade Ministry said it had raised the matter with President Yoweri Museveni, while Trade Minister Sanjay Tana has written to his Kenyan counterpart seeking urgent consultations.
Officials said Kampala would pursue dialogue through government channels and EAC institutions rather than retaliatory measures.
Kenya has defended the tax increase, saying it is necessary to protect 17 local sugar factories and safeguard the livelihoods of about two million farmers and millions of people dependent on the sector.
Ugandan industry leaders acknowledged Kenya’s right to support local producers but called for a balance between domestic protection and regional trade commitments.
Ashish Monpara, chairman of Modern Group of Industries and a member of Uganda’s Sugar Council, warned the higher duty could raise consumer prices, weaken demand and hurt manufacturers in both countries.
Trade data highlights the importance of the bilateral relationship. Kenya exported goods worth about $951 million to Uganda in 2024, while Uganda’s exports to Kenya were valued at around $527 million, according to the Observatory of Economic Complexity.
The sugar dispute now presents another test for the EAC’s ambition to build a common regional market while allowing member states to protect strategic industries.
