25 July 2013

Kenya: State Losing Billions of Shillings in Sugar Racket

The Kenyan economy loses billions of shilling through sugar smuggling syndicate operating in Somalia with cartels in the country.

Reports indicate that hundreds of thousands tons of sugar are illegally smuggled daily into the county via the north-eastern region from Somalia port city of Kismayu.

According to the Kenya Sugar Board, the industry regulator, Kenyans consume 800,000 tons of sugar annually, but the country has production capacity of 500,000 tons, leaving a shortfall of 300,000 bags of sugar which is supposed to be met with imports from the Common Mraket for Eastern and Southern Africa (COMESA) region.

However, most of this sugar is smuggled into the country through the porous Kenya-Somalia border, escaping taxation. The smuggling is facilitated through cartels working with security and customs officials along the Kenya-Somalia border.

An official at the Garissa County Development Office an estimated Sh100 billion ($1.2 billion) worth of sugar is smuggled annually.

Most of the sugar is never declared denying the government millions of shillings in taxes making the country one of the largest market for the smuggled sugar.

The Kismayo port in Southern Somalia is often used by smuggling networks with Kenyan links, according to a UN report published recently. According to the report, released in July 2011, an estimated $35 million and $50 million are are traded in export of charcoal per year , which in turn finances the import of sugar, much of which subsequently finds its way as contraband into neighbouring countries, particularly Kenya.

The viability of the Kismayu trade corridor largely depends on its proximity to Kenya, where smugglers have found the profitability of the contraband trade while taking advantage of the porosity of the expansive border.

Apart from sugar, the smugglers also bring in other commodities such as rice, electronic goods, textiles, vehicle spare parts and even small arms and other weapons.

North Eastern regional police boss Charlton Mureithi said the smuggling cartels has been a problem, an issue the he said, the government is determined is stem out. "It is a fact that cross-border trade is an integral part of our economic property, but we have realized that some cartels conspire with some security agents to deny the government huge revenue from imports and putting the country's security in jeopardy through the smuggling of light firearms," he said.

The Garissa County Commissioner, Harun Rashid Khator said much has been achieved in monitoring cross-border movement of both people and good in and out of Somalia.

"Since the start of the security operation in April, we were able to contain smuggling of people and goods. The notorious illegal cross-border trade has now significantly been contained," he told The Star.

He stressed that the government has taken steps at the border to curb insecurity and hunt down smugglers of goods whom he said were mainly responsible for smuggling of firearms into the country often disguised as household commodities.

He said the government has deployed the border Patrol Unit, the Rapid Deployment Unit and the General Service Unit to enhance the fragile county security situation.

He warned rogue government officials against colluding with criminals to sabotage the national security. "Such people if found culpable will be dealt with harshly," he said.

"It is true that many goods such as motor vehicles and its spare parts, petroleum products, tires, washing detergents, textiles, electronics, batteries and sugar enter Kenya from Kismayo through the expansive porous border, a situation that normally aids the importation of illegal firearms," he said.

Upon crossing into border into the country, the sugar is often offloaded at the outskirts of towns, repackaged and transported on donkey carts and boda boda before it finds its way into the market for sale.

Detectives in the insecurity-hit Garissa town, a flourishing black market could also be the main cause of the frequent gun and grenade attacks.

"The cartel often hire an execution squad. Targeted for elimination are custom officials and security agents," said a detective on condition of anonymity because he is not authorized to speak to the media.

The government has often linked the gun and grenade attacks especially in Garissa to smugglers which mostly import goods from the neighbouring war-torn Horn of Africa country.

Reports indicate the spate of killings in Garissa town that has so far claimed tens of Government officials including police and custom agents, is linked to the illicit trade where the victims may have differed with the trade barons before they are brutally executed .

According to detectives, the killing of two employees of the Kenya Revenue Authority ( KRA) in March were killer squad said to be acting at the behest of sugar barons who later fled when the government launched operation to flash out criminals.

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