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.
Leave a Comment
You must be logged in to post a comment.