Holding sugar investment project had other aims

20Apr 2019
The Guardian
Holding sugar investment project had other aims

PRESIDENT John Magufuli earlier this week directed top officials in departments concerned with lands and industries to ensure that a project proposed back in 2017 to start a 25,000 acre sugar plantation and put up a sugar factory is processed rapidly and takes off soon.

The project by a Mauritius state-led company, the Sugar Investment Trust (SIT) was not rapidly taken up and the necessary efforts to find land for the project as well as permits for regulatory needs brought the company's board chairman to seek audience with the president on the issue, noting the constant emphasis on facilitating foreign investments. He finally had audience, and acted upon.

The news about a major sugar investment plan taking two years and not getting off the ground came in the wake of clear confusion in the ranks of the Ministry of Industry and Trade concerning the sugar import regime.

At a certain point it was decided that local sugar manufacturers should no longer import the material but those who make beverages or confectionaries that require a specified type of sugar that isn't offloaded into the market can do their importing, for those needs in particular.

The decision was rather hurriedly rescinded, so local sugar companies can still import sugar from outside, repack it and sell as it was a local product, happy at that.

As a matter of fact a competitive situation would have required that the sugar is imported and placed on the market by importer's price, which suggests that many local producers would close shop as cheaper sugar would be sufficient. Many people and especially members of Parliament see that situation as hellish and leads to the death of local industries, whereas that is not the case.

The owners would simply be compelled to sell shares to well placed investors, acquire new technology, shed labor and produce more competitively, not just close shop and go home. But this scenario too isn't the favorite vision of conservatives detesting selling shares to foreigners.

There is an expression that the best way to go forward is to know what to take and what to leave behind, in which case industrial progress requires a competitive and not a protectionist situation.

This preference for a protected market appears to be the reason officials were holding back the major sugar investment plan as the prospect of covering the gap in sugar needs with a new major project would scuttle their plans to continue with large imports that are relabeled as local produce and put to the market at much higher prices than ought to be the case. They parade this practice as proper for protection of local industry, while it impoverishes consumers.

Since the fifth phase government is intent on walking the talk on industrialization, many of these bureaucratic bottlenecks ostensibly put in place to protect local industries but in actual fact making the people poorer shall yield to pressure slowly but surely.

This is the only way to avoid upheavals that we now see taking place in many parts of Africa, and a number of others waiting to happen. People don't sleep on empty stomachs singing nationalist hymns as it doesn't work. Getting investments, flooding the country with cheap local sugar is good.