Bonface Kanyamwaya, a journalist at TUKO.co.ke, has more than 10 years of financial, economic, business, markets, and aviation expertise, providing insights into Kenya and global trends.

The Kenyan government has initiated plans to lease out four state sugar firms to private investors in a bid to revitalise the struggling sugar industry.

Agriculture Cabinet Secretary Mutahi Kagwe said early this month that the four millers were competitively procured, paving the way for their new managers to take over operations of the mills for a period of 30 years.

He said that part of the reason for leasing out the sugar firms was to ensure they have the necessary resources to operate efficiently without any interruptions.

"I would like to assure the public and all stakeholders that the negotiated terms represent the best possible outcome to ensure the revival of the sugar sector. I call upon your continued support in realising this vision. The Ministry remains fully committed and ready to address any concerns that may arise," said Kagwe in a statement seen by earlier this month.

Under the plan, West Kenya Sugar Company took over Nzoia Sugar Company, while Kibos Sugar and Allied Industries Ltd took control of Chemelil Sugar Company. Sony Sugar Company was leased to Busia Sugar Industry, and West Valley Sugar Company Ltd took over Muhoroni Sugar Company.

The government plans to use KSh 1 billion to pay workers’ salaries in the four leased sugar firms. The money will be used to pay staff salaries and pensions. Out of this amount, KSh 600 million will be used to pay part of the staff salary arrears, while the remaining amount will be used to settle salaries from May 2025.

Nzoia Sugar Company has been placed under the management of Rai Group, which is managed by tycoon Jaswant Rai. Kibos Sugar & Allied Industries takes control of Chemelil Sugar Company. The firm is owned by the Chatthe family, under Chatthe Group, whose director is Jassi Chatthe. On the other hand, Busia Sugar Industry Limited, founded by Ali Ahmed Taib, took over the management of Sony Sugar Company. Muhoroni Sugar Company will be under the management of Bernard Soi, owner of West Valley Sugar Company.

Farmers and a section of politicians from Western Kenya have opposed the takeover plans. They want their salaries and pensions paid first as a condition for the takeover of the four mills by the private investors.

The four sugar firms will be leased out for a period of 30 years, according to a deal the new investors signed with the government. Once the lease expires, the new investors can negotiate for a lease extension, or the government can take back the firms under new terms.

The plan to lease out the four sugar firms is a departure from the previously proposed privatisation route that was rejected after further public participation and legislative review. Under leasing, the new investors will bring in capital, expertise, and efficiency, while the government focuses on oversight and accountability.

In other news, the government has increased cane prices to KSh 5,500 per tonne, up from KSh 5,300, to boost farmers’ earnings.

Sugarcane farmers in Kenya have been pleading with millers to increase the prices of cane delivered to factories.

In some instances, they have staged protests demanding better pay from millers, whom they have accused of offering them low prices for raw cane.

Source: TUKO.co.ke