Saturday 17th May, 2025 06:00 AM|

An emotive debate has emerged over plans by the government to lease out sugar millers, with stake holders calling for a transparent and competative processes.

Kisumu governor Anyang Nyong’o has been particularly vocal that the process must involve farmers, workers and county governments to ensure success and accountability.

According to the government, the leasing out of the millers will ensure a new era of efficiency, increase productivity and stabilise the sector which has been plagued by debt and mismanagement.

Given the fact that the sugar sector is the major economy of the Western Kenya counties, it is important that the process be done in a manner that will benefit farmers in form of steady incomes and create job opportunities.

That is why the government must come clear on murmurs that the process is tailored to sell the millers to well-connected individuals with an appetite for the land where the factories are situated.

As we have argued here before, the decision by the National Treasury to audit and rationalise Kenya’s 260 State corporations, in a cost-cutting measure, is a move in the right direction.

With the taxman hard-pressed to raise revenue to fund Kenya’s ambitious budget, loss-making entities are now becoming a burden to the economy and indeed taxpayers.

But the Treasury must ensure the audit, which has so far evaluated 18 State corporations, continues to all others so that a rescue package is outlined for each struggling entity, and ensure the profit-making ones remain profitable.

Already, the audit reveals that an estimated Sh70 billion, which would otherwise be required to support the troubled State agencies, can be rescued annually. By any standards, this is a lot of money given that we have a total of 260 corporations.

It is worth noting that out of the 18 State corporations targeted in the audit, only four were profitable with the remaining 14 being either unprofitable, loss making or operating below cost recovery.

These unprofitable corporations pose high fiscal risks to the government due to the large debts they owe Treasury coupled with associated repayment risks, as well as unsustainable pending bills and arrears. This is in spite of some entities like Kenya only a couple of years ago. It is about time a lasting solution is found. Those that cannot be resuscitated must be privatised.

It will not be a walk in the park for the Treasury, and it must therefore move with speed and demand for expenditure rationalisation, call for revenue enhancement measures, and seal all revenue leakages to cushion the national purse.

The Treasury will however be hard pressed to give a solution to social service providers such as Kenyatta National Hospital, Kenya National Examinations Council, Athi Water Works Development Agency, and Kenya Wildlife Services which are operating below the cost of recovery.

Whatever it takes, these small steps are apt and could salvage what has been slowly sinking the ship.

Lastly, while these measures are part of wider calls from Bretton Woods institutions to improve the country’s fiscal vulnerabilities, it should not be a matter of ticking boxes, Treasury must borrow global best practices to cushion the economy while at it.