MBABANE – Eswatini’s sugar industry is facing a fresh external threat after Kenya introduced a steep increase in excise duty on imported sugar.
This is a move that has already forced local exporters to halt shipments worth thousands of tonnes and could undermine one of the industry’s most lucrative export markets.
The development comes as Ugandan sugar manufacturers have also protested the new Kenyan tax, warning that it would make exports to the neighbouring country commercially unviable.
However, the implications extend far beyond Uganda, with Eswatini now finding itself among the countries likely to suffer significant losses if the tax takes effect on July 1.
According to reports from Uganda’s Daily Monitor, the Kenyan Government plans to raise excise duty on imported sugar from KSh7 500 (over E900) per tonne to KSh40 000 (E5 000) per tonne under the Finance Bill, 2026.
The 5-fold increase has alarmed regional sugar exporters who have relied on the Kenyan market for years.
For Eswatini, the impact has been immediate.
Eswatini Sugar Association (ESA) Chief Executive Officer Banele Nyamane confirmed that exporters have already been forced to cancel planned shipments after realising they would not reach the Port of Mombasa before the July 1 implementation date.
He said the uncertainty surrounding the new tax meant exporters could not afford to risk sending consignments that might arrive after the deadline and become subject to the significantly higher levy.
“We have had to urgently cancel shipments that will not make it to Mombasa by July 1,” Nyamane said.
He explained that Eswatini had already exported approximately 10 000 tonnes of sugar to Kenya during the first half of the year.
“We had planned to ship around 8 000 tonnes every month from July onwards. Of that amount, about 2 500 tonnes had already been booked for shipping and is now at risk of facing this excise tax.”
Nyamane said customers had desperately tried to secure supplies before the deadline.
“Our customers pleaded with us to try and ship the sugar before June 30, but unfortunately this was impossible because vessels were simply unavailable.”
The consequence is that both buyers and sellers now face considerable uncertainty.
“We are not 100 per cent sure now if they will proceed to take the sugar in light of this,” he said.
The Kenyan market has become increasingly important for Eswatini because it offers considerably stronger returns than many competing destinations. Nyamane revealed that Kenya has consistently paid approximately US$70 more per tonne than the next best alternative export market. This premium has enabled Eswatini producers to maximise foreign exchange earnings while supporting the industry’s overall profitability. Losing that premium would significantly reduce export revenues, particularly at a time when global sugar markets remain volatile and producers continue to face rising production costs.
The latest developments, therefore, represent more than simply the loss of a market they threaten one of the industry’s highest-value export destinations.
Should Kenyan buyers reduce imports because of the higher tax burden, Eswatini exporters would likely be forced to divert sugar to lower-priced international markets, reducing earnings from every tonne exported.
Pressure on export earnings
MBABANE - The timing could hardly be worse for Eswatini’s sugar industry.
According to the Central Bank of Eswatini’s Recent Economic Developments (RED) report, exports of sugar and sugar products totalled E688.9 million in May 2026.
Although this represented a 39.6 per cent decline compared to April, the reduction was largely attributed to statistical base effects after exceptionally high European Union sugar consignments had been exported during April. The report nevertheless reaffirmed sugar’s importance as one of Eswatini’s biggest export earners and a key contributor to foreign exchange inflows. Given Kenya’s relatively attractive prices, replacing that market with lower-paying destinations would reduce export values even if export volumes remained unchanged.
The concerns raised by Eswatini mirror those expressed by Ugandan sugar manufacturers, who have formally petitioned Uganda’s First Deputy Prime Minister and Minister for East African Affairs, Rebecca Kadaga. According to the manufacturers, the excise duty contained in Kenya’s Finance Bill, 2026, threatens to undermine regional trade by substantially increasing the cost of imported sugar.
The tax would apply to imported sugar entering Kenya, making regional exports considerably more expensive compared to locally produced sugar. Regional producers fear this could discourage Kenyan importers from purchasing sugar from neighbouring countries, despite existing trade relationships developed over many years. The development has also reignited debate over trade barriers within the East African Community and the broader African Continental Free Trade Area (AfCFTA), whose objective is to facilitate rather than restrict intra-African trade.
Business leaders have increasingly argued that new national taxes and non-tariff barriers risk undermining efforts to strengthen regional value chains.
Shipping constraints worsen situation
MBABANE - While Eswatini sugar exporters attempted to beat the July deadline, logistical constraints proved insurmountable.
Eswatini Sugar CEO Nyamane said the shortage of available shipping vessels prevented exporters from accelerating deliveries despite strong demand from customers.
The inability to secure vessels has effectively exposed booked consignments to the new tax regime.
Should buyers decide the additional tax renders imports uneconomical, exporters may have to redirect cargo to entirely different destinations, potentially at substantially lower prices.
Such diversions are often costly because they involve revised shipping schedules, altered logistics and fresh negotiations with buyers.
Beyond the immediate shipment cancellations, uncertainty now hangs over future exports.
Some contracts may need to be renegotiated, while others could be cancelled altogether depending on how importers respond to the increased tax burden.
For Eswatini, whose sugar industry supports thousands of direct and indirect jobs across farming, transport, milling and export logistics, any prolonged reduction in exports would have wider economic implications.
The sugar sector remains one of the country’s largest private-sector employers and among its most significant foreign currency earners.
Lower export revenues could ultimately affect growers, millers, transport operators and numerous downstream businesses that depend on the industry’s performance.
Should Kenya become commercially unattractive, exporters may have little choice but to identify alternative international markets.
However, Nyamane indicated that such alternatives are unlikely to match Kenya’s pricing advantage.
The US$70 per tonne premium currently offered by Kenya highlights the challenge exporters would face in replacing the market without sacrificing revenue.
Finding substitute buyers is also unlikely to happen immediately, given the competitive nature of the global sugar market and existing supply arrangements in many importing countries.
The coming weeks will determine whether Kenyan importers continue purchasing Eswatini sugar despite the significantly higher excise duty or whether exporters will be forced to redirect supplies elsewhere.
For now, exporters remain in a holding pattern, with cancelled shipments, uncertain contracts and growing concern over the future of one of Eswatini’s most rewarding export markets.
Should the new tax remain unchanged and buyers scale back imports, the impact is likely to extend beyond individual exporters, affecting foreign exchange earnings, industry profitability and the broader economy.
For a sector that has long stood as one of Eswatini’s economic pillars, Kenya’s tax decision represents yet another reminder of how policy changes in export markets can rapidly reshape the fortunes of local industries. Eswatini’s sugar industry generated a record E7.7 billion in total revenue for the 2024/25 financial year, an increase from E7.4 billion the previous year. The sector remains a pillar of the national economy, accounting for about a quarter of all export earnings and supporting nearly 30 per cent of the workforce. Eswatini’s sugar industry remains a crucial driver of the national economy with the bulk of the sugar produced being exported.
Eswatini’s sugar industry is facing a fresh external threat after Kenya introduced a steep increase in excise duty on imported sugar.