SUGAR PRIVATISATION

Push ahead with leasing public sugar companies

In Summary

• Government is offering 25-year leases on five loss-making sugar mills in western Kenya

• Privately owned sugar companies have steadily increased their market share over the last decade

A truck carries sugar cane to an open yard at Mumias Sugar Factory on February 24, 2015.
A truck carries sugar cane to an open yard at Mumias Sugar Factory on February 24, 2015.
Image: FILE

Nationalisation is only justified if an industry is a monopoly which could be abused by a private operator seeking super-profits. Occasionally it may be necessary in the national interest to rescue a strategic company such as Kenya Airways.

The state should not get involved in an industry where the private sector operates efficiently and profitably. 

Three weeks ago the government asked for bids to lease five state-owned sugar mills—Chemelil, Miwani, Muhoroni, Nzoia and South Nyanza sugar companies. Mumias is under receivership with KCB.

 
 

Many farmers in western Kenya want the state to remain involved and to provide subsidies to these failing sugar companies. This would be a grave mistake.

Eight out of 16 sugar companies in Kenya are privately owned. Their market share has steadily risen over the last decade and they are generally profitable. They pay tax, suppliers and workers on time – unlike the public sugar mills.

What benefit does anyone get from keeping six mills in public ownership? Zero! They only cost the taxpayer billions to constantly bail them out.

Let the private sector take over all loss-making mills as the government has proposed.

Quote of the day: "There is a syndrome in sports called 'paralysis by analysis."

Arthur Ashe 
He
became the first black man to win Wimbledon on July 5, 1975