The Council of Governors (CoG) has expressed support for the government's recent decision to lease four state-owned sugar factories to private investors, emphasising the move as a strategic step towards revitalising the country’s struggling sugar industry.
Speaking in Mombasa on Thursday, CoG Chairman Ahmed Abdullahi, alongside Vice Chairman Mutahi Kahiga and Agriculture Committee Chair Ken Lusaka, urged stakeholders to view the reforms objectively, free from political bias.
"As a council, we support the leasing and privatisation of public sugar companies. We see privately managed sugar companies making significant profits," Abdullahi stated.
"If private management can turn around hefty losses and bring in efficiency, why block the government from doing it? Those opposing it are doing so for political reasons."
Abdullahi noted that the decision aims to increase profitability in the sugar sector and reduce reliance on sugar imports, thereby saving foreign exchange.
He stated that CoG will not follow the steps of government critics who oppose reforms “for the sake of politics”, saying the leasing will save on the forex used to import sugar.
Hitting out at those against the move, Abdullahi said the due process leading to the reforms was followed.
The government completed the process of leasing the sugar companies over the weekend.
Agriculture CS Mutahi Kagwe said following a broad-based consultation, four private millers were awarded a 30-year lease for the operation of Nzoia, Chemilil, Sony and Muhoroni Sugar Companies.
“The procurement of the four firms followed broad-based engagement with stakeholders across the sugar sector dating back to the year 2015 when Parliament approved the process,” he said.
The CS said leasing of Nzoia Sugar Company has been awarded to West Kenya Sugar Company, while that of Chemilil Sugar Company has been awarded to Kibos Sugar &Allied Industries Limited.
He said leasing of Sony Sugar Company has been awarded to Busia Sugar Industry Ltd, and that leasing of Muhoroni Sugar Company has been awarded to West Valley Sugar Company.
“The four firms were competitively procured by the government through the Ministry of Agriculture and Livestock Development, the Kenya Sugar Board, and other key government players,” he said.
He observed that the decision to lease out the four factories was arrived at after lengthy consultations with key stakeholders across the sugar sector, including farmers, sugar factory workers, unions, Members of Parliament, Governors and approvals by the Cabinet.
The CS said the decision was informed by the need to ensure a return on investment for taxpayers, who have, over the years, bailed out the ailing sugar sector.
“Last year, the government wrote off over Sh117 billion to bail out the local sugar industry and injected an additional Sh2.5 billion to clear arrears owed to farmers and workers,” he said.
Kagwe reassured all stakeholders that no public land will be sold or acquired under the leasing agreements.
“All assets belonging to the four sugar companies, including land, will remain the property of the national government,” he said.
“The assets will be leased out to the lessees annually based on the prevailing market rate, with proceeds being collected by the Kenya Sugar Board for reinvestment into communities around the four factories and for utilisation in cane development.”
