Key Takeaways:
- Ugandan sugar exporters oppose Kenya’s 300% tax hike.
- The levy threatens exports, jobs and factory operations.
- The dispute could strain East African trade ties.
Ugandan sugar manufacturers are protesting Kenya’s decision to raise excise duty on imported sugar by more than 300%, warning that the move could cripple one of Uganda’s biggest export industries and reverse years of East African trade integration.
The Uganda Sugar Manufacturers Association (USMA) has written to the ministries of Trade and East African Community Affairs, urging Kampala to intervene before the new levy takes effect on July 1.
Kenya’s Finance Act, 2026, signed into law this week by President William Ruto, raises excise duty on imported sugar to Ksh40,000 ($308) per tonne from Ksh7,500 ($57.82).
Ugandan manufacturers say the more than fivefold increase will effectively price their sugar out of the Kenyan market.
Industry protests
In separate letters dated June 20 and June 25, USMA warned that Kenya’s decision threatens not only Uganda’s sugar exports but also the principles of free trade under the East African Community (EAC).
“The implementation of this measure is expected to significantly reduce the competitiveness of Ugandan sugar in the Kenyan market and disrupt longstanding regional trade relations developed under the EAC integration framework,” USMA chairman Jim Mwine Kabeho said.
Kenya has become Uganda’s largest regional sugar market, importing an estimated 100,000 tonnes annually to supplement domestic production.
Manufacturers fear the new tax will sharply reduce demand, leaving factories with excess stocks, lower revenues and declining export earnings.
For Uganda, the consequences extend beyond trade figures. The sugar industry is one of the country’s largest agro industrial sectors, supporting thousands of sugarcane farmers, creating thousands of direct and indirect jobs and generating significant foreign exchange earnings.
Manufacturers warn that losing the Kenyan market could force factories to reduce operations, depress sugarcane prices, delay investments and trigger job losses across the value chain.
Kabeho described Kenya’s latest action as part of a growing pattern of protectionist policies.
“It is disappointing that while Kenya continues to experience shortages in domestic sugar production, it is increasingly using tax measures to lock out suppliers from within the EAC,” he said.
He argued that the new levy amounts to a non tariff barrier disguised as domestic taxation.
Trade row resurfaces
The latest dispute revives one of the region’s longest running trade disagreements.
Uganda and Kenya have periodically clashed over sugar trade since 2011, when Kenya allowed duty free imports from Uganda to address domestic shortages.
Kenyan authorities later accused traders of importing sugar from outside the region, repackaging it as Ugandan produced sugar and exporting it duty free under EAC rules.
The accusations led to restrictions on Ugandan sugar in 2014 before expanding to other products, including milk, maize and eggs.
Over the years, both governments have relied on bilateral negotiations and EAC institutions to remove tariff and non tariff barriers.
In August 2025, trade ministers from both countries agreed that goods originating from Uganda and Kenya would be treated as transfers rather than imports, reaffirming commitments under the EAC Customs Union and Common Market protocols.
The issue was again discussed during the 25th Ordinary Summit of EAC Heads of State in Arusha in March, where partner states committed to eliminating all outstanding tariff and non tariff barriers by June 30, 2026.
Kampala seeks intervention
Trade and Industry Ministry spokesperson Khadija Nakakande said the ministry has informed President Yoweri Museveni about the industry’s concerns, while Trade Minister Sanjay Tana has formally written to his Kenyan counterpart seeking urgent consultations.
Trade Ministry commissioner Dennis Ainebyoona confirmed that discussions with Kenyan authorities are under way following earlier engagements led by State Minister for Trade Gen Wilson Mbasu Mbadi.
Ugandan officials say they intend to resolve the dispute through government to government dialogue and existing EAC mechanisms rather than retaliatory measures.
Kenya defends tax
On its part, Kenya maintains that the tax increase is necessary to protect its domestic sugar industry.
President William Ruto recently defended the measure, saying it would safeguard the country’s 17 operational sugar factories and protect the livelihoods of about two million farmers and nearly 10 million people who depend on the sector.
Ugandan industry leaders acknowledge Kenya’s right to support local producers but argue that it should not undermine regional trade commitments.
Ashish Monpara, chairman of Modern Group of Industries and a member of Uganda’s Sugar Council, warned that the higher duty could increase consumer prices, reduce demand and hurt manufacturers on both sides of the border.
“If the increased duty applies to Ugandan exports, it will reduce our competitiveness and affect regional trade. We hope all EAC member states continue supporting free regional trade while protecting their industries in a balanced manner,” he said.
Monpara added that sugar is an essential household commodity and cautioned that excessively high taxes could raise the cost of living for Kenyan consumers while discouraging investment across the regional sugar industry.
According to the Observatory of Economic Complexity, Kenya exported goods worth about $951 million to Uganda in 2024, while Uganda exported products valued at approximately $527 million to Kenya, making the two countries among each other’s largest trading partners.
