Multiple private firms needed in sugar sector

In Summary
  • President Ruto has promised to lease rather than privatise loss-making public sugar mills
  • Most loss-making sugar mills are publicly owned but the sugar sector still needs competition
Harvested sugar cane is ferried to Sony Sugar Factory near Awendo town.
Harvested sugar cane is ferried to Sony Sugar Factory near Awendo town.
Image: KNA

President Ruto has again returned to his theme of breaking up the sugar cartels in Kenya.

Ruto's plan seems to be to lease out publicly owned sugar mills rather than privatising them. In itself that is not very radical because a long-term lease is little different to a permanent sell-off.

However Ruto appears to have recognised that the private sector is more efficient at running sugar mills than the public sector. Private sugar mills in Kenya make profits while public ones make losses. 

Logically then, all sugar mills should be privately owned. After all, farmers just want to sell their cane and be paid for it. It does not matter whether the mill is publicly or privately owned.

Ruto is also doing the right thing to commit government to clearing debts owed to cane farmers by public mills. This is essential if these mills are to be viable entities.

Of course, the market is only effective when there is genuine competition so government should not allow one company or family to control the whole sugar industry. The Competition Authority should ensure that there are multiple players in the sugar industry.

Quote of the day: "I don't know what other people are doing - I just know about me."

Thelonious Monk
The American jazz pianist was born on October 10, 1917

WATCH: The latest videos from the Star