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August 19, 2018

Kakamega should steer clear of Mumias Sugar

Mumias Sugar Company Limited./FILE
Mumias Sugar Company Limited./FILE

Mumias Sugar Company is in a financial crisis and has asked Kakamega county for a bailout of Sh200 million. Mumias is about to lay off half its workforce. 

Governor Wycliffe Oparanya has indicated that he is reluctant to get involved and will only do so if he is backed by local MPs.

Oparanya is right. He should steer clear of getting involved with Mumias.

Mumias has received Sh3.7 billion of state funds already and will get another Sh2 billion for retrenchment and to pay farmers if it goes ahead with a restructuring plan.

Kakamega's Sh200 million would be just a drop in the ocean. It would vanish immediately.

Oparanya also indicated that the county could consider taking over government's 14 per cent share of Mumias. This is an even worse idea.

A 100 per cent tariff is imposed on imported sugar. If Kenyan sugar companies cannot break even at double the world price, what is their long term prospect for survival? Kakamega county could be driven bankrupt by the black hole of Mumias.

 

Quote of the day: "The eagle flies high and cannot be touched by the spit of the toad." - President Mobutu Sese Seko fled Zaire (Congo) on 16 May, 1997

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