Bitter Sugar: How Government Policy Has Left The Kenyan Sugar Industry In Chaos

From the colonial days to present day, the sugar industry has been an integral component of the Kenyan economy. It has grown in significance over the years, in the present day the sector contributes about 15 percent to the country’s agricultural GDP, the industry also supports around 250,000 small businesses, workers and farmers. An estimated 25 percent of the country’s population depends directly or indirectly on the sugar industry for their livelihood. While facing stiff competition from international sugar producers, the Kenyan government has pursued mercantilist policies in order to protect domestic sugar producers and enforces consumption of domestically produced sugar through a myriad of policy tools. Whereas this policy approach has seemed politically prudent and expedient, it has come at the cost of a vibrant and competitive sugar sector. This paper chronicles the role of the state, through its policy tools and instruments in altering the incentive structure for various players in the sugar sector. This analysis is examined from the prism of four distinct but at times overlapping policy regimes: the State Centric Regime, the SAPs Liberalism regime, the mixed market regime and the COMESA Regime. While many past studies have analyzed the general state and the technical malaise in the sugar industry in Kenya, very few researchers have sought to proximate the role of the state in the performance of the industry. This paper adopts an institutional approach to depict the evolution of state involvement in Kenya’s sugar industry, as well as explore the ramifications and unintended consequences of state interventions.


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