By Anderson Ojwang’
Kenya’s sugar industry faces an imminent glut following a possible saturation of the local market after a multi-agency team flagged 1,481 metric tons of excess sugar imported into the country.
In the eye of the storm is the Kisumu-based Kibos Sugar and Allied Industries, through its subsidiary, Mombasa Sugar Refineries Limited (MSRL), which was accused of importing an excess of 1,481 tons of raw sugar into the country.
According to a recent publication by the Consumer Federation of Kenya (COFEC), the multi-agency government team recently withheld the release of a 27,839-metric ton raw sugar consignment imported by Mombasa Sugar Refineries Limited (MSRL), a subsidiary of Kisumu-based Kibos Sugar.
The publication said the verification exercises uncovered an unaccounted excess of 1,481 metric tons at Mombasa Port — raising immediate questions about the integrity of the importation.
The disclosure was contained in a report generated by the Multi-Agency Team (MAT), following verification activities conducted across three sites: Mombasa Port, the Nairobi Freight Terminal, and MSRL’s processing plant in Kisumu.
Like many other private firms, Kibos Sugar acquired publicly-owned Chemilil Sugar and has many subsidiaries dealing in ethanol and fertilizers.
Recently, the government reduced the minimum sugarcane price from Sh5,750 to Sh5,500 per ton.
Similarly, the cost of a 50kg bag of sugar, which previously retailed at approximately Sh7,000, informed the earlier cane price of Sh5,750 per ton.
Currently, a sharp price fall of a 50kg bag of sugar to between Sh6,000 and Sh6,100 necessitated the review of raw material costs to ensure the industry remains viable.
In a statement, the Kenya Sugar Board said the move followed extensive consultations aimed at balancing farmer earnings, miller sustainability, and prevailing market realities as sugar production rises across the country.
“In a directive issued by the Kenya Sugar Board on April 24, 2026, all millers were instructed to immediately implement the new price and ensure prompt payments to farmers,” read the statement.
The statement said the decision was reached after deliberations by the 4th Interim Sugarcane Pricing Committee, which reviewed current market conditions and consulted key industry players.
Sources familiar with the discussions indicated that some millers had pushed for the price to be reduced further to Sh5,000 per ton, arguing that rising production costs and falling sugar prices were squeezing their margins.
“However, after careful consideration, the government settled on Sh5,500 per ton to protect farmers from a steep reduction while still responding to changing market dynamics,” read the statement.
The reduction in cane prices could have been as a result of saturation of the local sugar market by excess sugar imports, putting local farmers at risk.
Players in the sugar industry revealed that the millers had wanted the cane prices to be reduced to Sh4,500 because of the flooding of the local market by imported sugar.
Recently, Suba South MP Caroli Omondi raised a red flag over the reduction of cane prices.
The tone and style of the MAT report signals that the matter may move beyond routine regulatory oversight into the realm of senior political and fiscal decision-making.
Why was the excess consignment not declared?
At the centre of the standoff is a finding by the MAT that the consignment arrived with 1,481 metric tons more sugar than had been declared and accounted for — a discrepancy identified through the Kenya Ports Authority (KPA) OutTurn Report.
Under the binding conditions governing the release, MSRL was required to account for all excess landed quantities and seek formal clearance through the KenTrade and iCMS platforms before any sugar could leave the port.
MSRL has pushed back. The company has formally written to KPA disputing the computation of quantities, triggering a three-way reconciliation process now underway between MSRL, KPA, and the Kenya Revenue Authority (KRA).
The consignment remains blocked at the port CFS pending resolution.
According to the publication, the significance of 1,481 unaccounted tons cannot be understated.
At prevailing wholesale prices for raw sugar, the quantity represents substantial fiscal exposure — and in a sector notorious for the diversion of industrially-imported sugar into the retail market, an unexplained excess at the point of entry is precisely the kind of red flag the MAT framework was designed to catch.
Verification
Beyond the quantity dispute, the MAT’s site inspections across the three locations returned a mixed picture:
At Mombasa Port, the team confirmed the presence of the cargo and found that bags were packaged in varying weights of between 46 and 49 kilograms — a notable finding given that standard commercial sugar bags carry uniform weights. All bags were confirmed to be marked “NOT FIT FOR HUMAN CONSUMPTION” as required.
At the Kisumu processing plant, the MAT found that MSRL’s facility is adequately prepared to receive, store, secure, and process the entire consignment — clearing a key prerequisite for eventual release.
At the Nairobi Freight Terminal, verification was also completed as part of the end-to-end logistics assessment.
The team further agreed that any emerging operational issues around transportation, storage, and processing would be jointly discussed and addressed conclusively — a provision suggesting the agencies anticipate further complications as the consignment moves through the supply chain.
Conditions
Notwithstanding MSRL’s execution of the binding compliance declaration on 27th March 2026 — signed by Group Corporate Affairs Manager Joyce Opondo and General Legal Counsel Nicholas Melkior Oloo — the consignment has not been released.
The MAT has also developed a draft action plan aligned with the release conditions to facilitate movement of the consignment to MSRL’s Kisumu plant once the quantity dispute is resolved.
Five documents have been generated, including the signed release conditions, an implementation matrix, and the three site verification reports from Mombasa Port (dated 31st March 2026), Kisumu, and the Nairobi Freight Terminal.
We could not reach any of the official spokespersons of MAT institutions for their comment.
Next steps
The ball now rests with MAT leadership to determine the way forward.
Three scenarios are possible:
- If the KPA-KRA-MSRL reconciliation resolves the 1,481-tonne discrepancy in MSRL’s favour, the cargo could be released under the strict MAT conditions already signed.
- If the excess quantity is confirmed as genuinely unaccounted for, MSRL faces the prospect of formal duty and tax assessments on the additional tonnage, potential seizure, or prosecution.
- If the dispute remains unresolved, the consignment faces extended detention at Mombasa Port — with accumulating demurrage costs adding commercial pressure on MSRL to reach a settlement quickly.
Significance
The MSRL consignment saga spotlights systemic vulnerabilities in Kenya’s sugar import governance. The involvement of at least nine government agencies in the MAT — spanning KSB, KRA, KPA, KEBS, KenTrade, and the National Police Service — reflects the scale of institutional anxiety around sugar diversion, a problem that has cost Kenya’s domestic industry and treasury billions of shillings over many years.
The high fiscal stakes involved and the political sensitivity of the consignment cannot be over-emphasized.
Mombasa Sugar Refineries Limited (MSRL) formally committed to a sweeping 15-point compliance regime imposed by a government Multi-Agency Team, in a move that underscores deepening official anxiety over the diversion of industrially-imported sugar into Kenya’s retail market.
The Kenya Sugar Board, acting on behalf of the Multi-Agency Team (MAT), issued the conditions on 26th March 2026, with MSRL’s authorised representatives signing the Declaration of Compliance the following day, 27th March 2026.
The document establishes what amounts to a cradle-to-grave surveillance architecture over every kilogram of raw sugar in the consignment, from Mombasa Port all the way to MSRL’s processing facilities in Kisumu.
The conditions, issued by KSB and accepted by MSRL a day later, cover 15 activity areas including:
(a) Port verification — MAT officers must physically visit Mombasa Port warehouses to confirm cargo quantities and ensure all bags are marked “NOT FIT FOR HUMAN CONSUMPTION” in indelible ink.
(b) Site verification — MSRL must install CCTV across all storage and processing areas, with footage retained for the full duration of the consignment cycle. MAT retains on-demand access to all footage.
(c) Transport logistics — Sugar must move from Mombasa to Nairobi via the Standard Gauge Railway (SGR), then onward to Kisumu by road in close-bodied, RECTS-compliant trucks moving in convoys on pre-approved routes. Any truck breaking from the convoy must be immediately reported to MAT.
(d) Cargo security — Each truck must carry tamper-proof customs seals and Regional Electronic Cargo Tracking System (RECTS) e-seals, armed at loading and disarmed only at destination. MAT officers are to be deployed at designated checkpoints along the entire route.
(e) Traceability and accountability — MSRL must maintain a real-time production register recording daily input-output ratios, refined sugar quantities, by-products generated, process losses, and sales — including buyer identity, PIN, invoice number, and price.
(f) Distribution restrictions — White refined sugar produced from the consignment may only be sold to manufacturers, not retailers or the general market. All bags must bear the marking “WHITE REFINED SUGAR — FOR INDUSTRIAL USE ONLY.”
(g) Final end-to-end audit — Upon exhaustion of the consignment, MAT must undertake a comprehensive audit reconciling all quantities from port to final sale, including monthly VAT returns. The audit report must be submitted to the Cabinet Secretary, National Treasury (CS, NT) within 14 days.
Consequences
The conditions make clear that any diversion of raw sugar into the domestic market constitutes a breach, alongside repackaging for retail, selling to non-manufacturers, tampering with CCTV or RECTS seals, and obstructing authorised officers.
Consequences of breach include suspension of the conditional release, seizure of the remaining consignment, recommendation for prosecution, and enforcement action to recover taxes.
Critically, MSRL expressly acknowledged in the Declaration that any diversion by its staff, representatives, or agents is its primary liability — a provision that pierces corporate veil arguments and places personal accountability squarely on the company’s leadership.
Scrutiny
The stringent conditions reflect a Kenya sugar sector under sustained pressure. The country has long grappled with the illicit diversion of industrially-imported sugar — brought in duty-free or at reduced tariff — into the retail food chain, undercutting domestic producers and cheating the exchequer of tax revenues. The involvement of no fewer than nine agencies in the MAT — including KRA, KEBS, KenTrade, and the National Police Service — signals that authorities are treating this consignment as a high-risk operation requiring whole-of-government oversight.
The requirements suggest the consignment carries fiscal dimensions significant enough to warrant senior political attention.
