This legal update explores the key changes to the sugar industry pursuant to the Sugar Industry Act (the Act)¹, which has recently been amended by the Written Laws Act of 2020 (the Amendment)².
The sugar industry in Tanzania has, in recent years, faced some challenges in respect of performance monitoring, hoarding, price fluctuation and importation. The Amendment aims, among other things, to tackle such challenges and impose strict penalties for the offences committed under the law.
Please refer to the definitions provided at the end of the article.
Approving authority: Persons who wish to import, breed or modify sugar cane or seed (fuzz), cuttings and seedlings need to now seek approval from the relevant authority. The term "relevant authority" is not defined, however, the authorities recognised under the Act are the Board and the Director (i.e. an officer-in-charge of the department in the Ministry of Agriculture).
Registration of mills or facilities: A person who intends to install a mill or facility for the manufacture of sugar must apply to the Board for registration. The Board may refuse to register such person if the intended installation area already has an operating mill or facility and there are insufficient resources, such as land and water, to facilitate operations. The Board may also refuse to register if the mill or facility will have an impact on the environment, society and economic viability of the sugar industry in general.
Limitation on issuing the sugar import licence: The Amendment directs the Board not to issue the sugar import licence unless the local sugar production is below the prescribed level at that given time. Furthermore, the applicant, in case of importation of sugar for domestic consumption, must be a manufacturer who:
- is registered by the Board as a sugar importer.
- has submitted to the Board a viable annual implementation plan.
- has implemented at least 80% of the previous annual implementation plan.
- has the capacity to produce not less than 10,000 metric tons per year.
- has a good track record for complying with the terms and conditions of sugar importation.
The penalty for operating without a licence: The licence referred is on importation and exportation of sugar. The Amendment introduces a new set of strict penalties by categories, which are:
- for a sugar manufacturer or importer, a fine between TZS 30,000,000 and TZS 500,000,000 or imprisonment for a term between 3 and 7 years, or to both a fine and imprisonment.
- for a sugar distributor or wholesaler, a fine between TZS 10,000,000 and TZS 100,000,000 or imprisonment for a term between 2 and 5 years or to both a fine and imprisonment.
- for a sugar retailer, a fine between TZS 200,000 and TZS 10,000,000 or imprisonment for a term between 6 months and 3 years or to both a fine and imprisonment.
- for a person not covered above, a fine between TZS 100,000 and TZS 5,000,000 or imprisonment for a term between 3 and 12 months or to both a fine and imprisonment.
Performance contract: The Board must now sign a performance contract for sugar production with every manufacturer in order to ensure that there is sustainable development and expansion. The signing must be done within 60 days from the date of issuing a new sugar import licence or 30 days for existing licences from the date the Amendment came into force (17 June 2020). The contract shall be for a term of 5 years, covering expansion targets, performance indicators and other terms, as may be agreed.
Annual implementation plan: A licensed manufacturer must submit an annual implementation plan of the performance contract at the beginning of every production season calendar year. Such requirement supplements the monitoring of the performance contract, as discussed.
Restriction to re-pack sugar: The Amendment provides that only manufacturers are allowed to re-pack sugar from its original packaging for the purpose of rebranding. Furthermore, all packages of imported sugar, re-packed or not, must indicate in bold print the name and contact details of the manufacturer and country of origin. A person who contravenes such requirement commits an offence and shall be liable to a fine between TZS 10,000,000 and TZS 100,000,000 or to imprisonment for a term between 1 to 3 years.
General penalty: These penalties apply where no special penalties are specifically provided, and have been increased into a fine between TZS 100,000 and TZS 10,000,000 or imprisonment for a term between 6 months to 2 years, or to both a fine and imprisonment.
Compounding of offences: The Director General³ may compound an offence if a person admits, in writing, of committing the offence. This must be done before commencement of proceedings in a court of competent jurisdiction and the person will be ordered to pay a sum of money not exceeding one half of the relevant penalty. If the person defaults to pay the money in accordance with the compounding order, the Director General may require such person to pay the said money together with interest thereto. Where a person fails to comply in paying the money plus interest, the Director General may enforce the compounding order and interest as if it were a decree of the court.
The Amendment expands some definitions which were already covered under the Act which are: export, import, manufacturer and sugar exporter.
- "export" means export of sugar or sugar by-products outside Mainland Tanzania.
- "import" means import of sugar or sugar by-products into Mainland Tanzania.
- "manufacturer" means a person who processes sugar cane to sugar.
- "sugar exporter" means any person or group of persons issued with export licence in accordance with relevant provisions of the Act.
The Amendment also introduces new and relevant terms to the definition section of the Act which are sugar importer, sugar by-products and sugar distributor.
- "sugar importer" is defined as a person registered and licensed by the Sugar Board of Tanzania (the Board), to import sugar or sugar by-products into Mainland Tanzania.
- "sugar by-products" includes molasses, briquettes, bagasse and such other by-products as may be derived from sugar.
- "sugar distributor" is a person registered by the Board to distribute sugar or sugar by-products in accordance with the provisions of the Act.
1. The Act - Sugar Industry Act, Cap 251 R.E 2002
2. The Amendment was published on 17 June 2020 and became operational from that date.
3. The Director General is the Chief Executive of the Board appointed by the Minister for Agriculture.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.