The government has completed the
long-awaited leasing of four public sugar factories, marking a turning point in
efforts to breathe life back into Kenya’s once-thriving sugar sector.
Agriculture and Livestock
Development CS Mutahi Kagwe said the government has officially handed over the
operations of Nzoia, Chemelil, Sony, and Muhoroni sugar companies to private
millers under a 30-year lease.
Kagwe said West Kenya Sugar Company
will now be operated by Nzoia Sugar; Chemelil has gone to Kibos Sugar and
Allied Industries; Sony Sugar will be run by Busia Sugar Industry Ltd; while
West Valley Sugar Company has taken over Muhoroni.
“Stakeholders in Kisumu, Parliament, and even
the courts agreed—leasing was the right model. This is not just about turning
profits; it's about restoring dignity to the thousands of families that depend
on sugar farming and processing,” he said.
The leasing model, Kagwe explained,
was a departure from the previously proposed privatization route that was
rejected after further public participation and legislative review.
He said plan now is to let private
operators bring in capital, expertise, and efficiency, while the government
focuses on oversight and accountability.
“The sugar sector has drained
billions from taxpayers over the years. Now it’s time we let strategic
investment drive its transformation,” Kagwe added.
As the four millers settle into
their new roles, the government has reassured farmers, workers, and the public
that it remains firmly committed to supporting the sector’s revival.
“This is a shared journey,” Kagwe
concluded.
“We have made a bold step, and with
continued public support, the sugar belt will thrive once again.”
Kagwe said the leasing is a product
of extensive stakeholder engagement dating as far back as 2015.
From Parliament and county leaders
to farmers and factory workers, Kagwe said all parties were involved in shaping
a leasing model aimed at reviving the ailing industry without losing public
ownership of key assets.
“This decision was not made in
haste. It follows years of public consultation, legislative approvals, and even
legal scrutiny,” said Kagwe.
“What we are doing is giving these
factories a fighting chance to stand again, for the sake of our farmers,
workers, and the country’s economy.”
The government has also moved to
address the pain points of the sector—unpaid debts to cane farmers and factory
workers.
Last year, the state cleared over Sh1.7
billion in arrears owed to farmers. However, since then, the factories have
accumulated an additional Sh500 million in unpaid deliveries, which the
government now pledges to pay in July 2025.
On the side of workers, the burden
has been heavier.
Out of Sh5.3 billion owed in unpaid
salaries and benefits, only Sh600 million was cleared last year. That figure
has now ballooned to an estimated Sh5.6 billion.
To manage this, the Ministry has entered into
a Memorandum of Understanding with the Kenya Union of Sugar Plantation and
Allied Workers (KUSPAW).
Under the agreement, there will be a
12-month transition period during which the new lessees will assess and decide
on the workforce needed.
During this time, the government
remains responsible for all unpaid salary arrears, pensions, and statutory
deductions.
“We will begin with Sh1 billion in
May—Sh600 million for partial arrears and Sh400 million to cover current
salaries. Another Sh1.5 billion will follow in July, with quarterly payments of
Sh1.17 billion continuing until June 2026,” said Kagwe.
He stressed that while the factories
are being leased out, public assets are not being sold given that land and
infrastructure remain under the government, with leases pegged to market rates
and revenues channeled through the Kenya Sugar Board for reinvestment in local
communities and cane development.
