The Government has lifted the lid on the identities of 16 companies whose export trade licences were revoked as part of a purge against suspected cartels in the sugar industry.

In a gazette notice published on Friday, Agriculture minister William Ruto said he had de-registered export licenses that had been issued to Gamaray Limited, Betterline Company Limited, Ikea Idea Enterprises, International Relief Supplies, Kijabe Variety Centre Limited and Lakeshore Food Processors Limited.

Other firms affected by the move include Liban Commercial Agencies Limited, Libken Agencies Limited, Mercbina International Limited, Mfizi International Company, Rimco (Kenya) Limited and Riana Investment Limited.

Also on the purge roll are Shree Sai Industries Limited, the Barn Limited, the Kenya Group Corporation Limited and South Nyanza Sugar Company.

Defied fundamentals

This means that only export licenses held by Mumias Sugar Company and Lubao Jaggery Factory remain effective. Mumias was handed the exemption owing to the fact that it handles Kenya's export quotas covered under the African Caribbean Pacific (ACP)-EU trade protocol that allows it to export 17,000 tonnes of sugar into the EU market every year.

Lubao was exempted because it deals in jaggery - a sugar by-product and was therefore not involved in direct export of the sweetener. While announcing the move last week, the minister said it was necessary because the high pricing of the commodity had defied basic fundamentals of demand and supply owing to cartels that had infiltrated the market, leaving consumers with huge expenditure bills.

He further argued that though Kenya had convenient arrangements with several partner Comesa states to offset her annual production deficit of 220,000 tonnes of sugar, consumers were faced with endless price surges - thanks to manipulations by groups seeking to maximise on profit.

"For instance, why should we have people exporting sugar from Kenya yet we know we are a deficit nation... there is no logic to export when you produce less," the minister said on Wednesday last week.

Mr Ruto accused the cartels of taking advantage of special export licences to evade taxes and divert the sugar into the local market. The exporters enjoy tax rebates for Value Added Tax (16 per cent) and Sugar Development Levy (SDL) (four per cent).

Undue advantage

"Some do not export the sugar. Instead it finds its way back into the local market at a much lower cost than that of local sugar, giving undue advantage to the exporters against local traders," Mr Ruto said.

The allure of "super profits" in emerging markets in South Sudan and Ethiopia was adding to the misery of Kenyan consumers as unscrupulous dealers diverted huge volumes of sugar into these prime markets, the minister said.

"Our national interest in satisfying demand far outweighs the benefits from trading in those markets," he added.

Analysts said the move by the minister was timely, coming at a time when consumers worldwide were facing relentless climbs in the prices of basic commodities.

"There has been a deliberate distortion of the market by people hungry for profits," industry analyst Mr Peter Kegode told the Business Daily. He said having one big player like Mumias to make the exports was logical because it cannot destabilise the market in which it holds huge investments"

Some analysts however urged the minister to institute a probe into the conduct of the Kenya Sugar Board (KSB) in issuing the export licences despite indications that the market was being manipulated by cartels.

Statistics from the Kenya Sugar Board ( KSB) showed that between January and March this year, some 21,000 tonnes of sugar had been shipped out of the country by some of the registered exporters.

The exports in the first three months of 2008 were slightly short of the five-year high figures realised in 2005 when 21,760 tonnes of sugar were shipped out of the country. This raises concern over the sudden spike in exports.

"The move shall eliminate market distortion and streamline the marketing of local and legally imported sugar for the benefit of consumers and the Kenyan economy," the minister said.