KEPSA SUPPORTS GOVERNMENT PLANS TO LEASE THE SUGAR COMPANIES

KEPSA SUPPORTS GOVERNMENT PLANS TO LEASE THE SUGAR COMPANIES

By Donald Kogai

Kenya Private Sector Alliance has supported

the proposed leasing of five state-owned sugar

mills, as a move to improve competitiveness of

the country’s sugar sector.

According to the business umbrella CEO, the

bid to lease the sugar mills will benefit all

stakeholders across the value chain, including

suppliers, transporters, production, service and

support extension workers, and farmers in the

respective regions.

The government has announced plans to lease

Chemelil, Miwani, Muhoroni, Nzoia, and South

Nyanza sugar companies.

“KEPSA was one of the stakeholders who

recommended leasing of the debt-ridden sugar

mills to private investors two years ago, to give

them a new lease of life. We therefore welcome

the government’s move to restructure and lease

these firms. We are confident that with the right

strategic investors on board, the sector will

return to profitability as demonstrated by

private sugar mills,” Ms Karuga said.

She added that leasing out of the mills will

enable the private sector to mobilize resources

to rehabilitate and modernize existing facilities,

improve financial, technical and operational

expertise, bring in efficiency and return the mills

to profitability. It will also enhance

competitiveness of Kenyan Sugar in both local

and global markets.

The five mills have had loss-making streaks for

more than a decade, negatively affecting

economies in the regions they operate in, and

the country as a whole. Previous interventions

by the government, including bailouts, have not

been successful. This has made the

government to propose leasing the five mills to

strategic investors.

At the moment, Kenya’s millers are not well-

positioned to compete with their rivals

especially with the impending end to sugar

import quotas from COMESA.

“Kenya cannot continue asking for extensions

of the COMESA deadline, like it has done in the

past. Leasing is the way to sustainably put our

house in order,” Ms Karuga said.

Under the proposed privatization move, the

winning bidders will lease the factories for at

least 25 years, operate them and produce sugar

as private entities while the Government will

continue owning the assets. This arrangement

will enable the sugar sector to be as

competitive as other agricultural sectors, such

as tea and coffee that are great contributors to

the country’s GDP.

About The Author

Leave a Commment

Leave a Comment