Kenya approves US$78M package for state-owned sugar mills as leasing plans gather momentum
KENYA – Kenya’s Cabinet has approved the write-off of debts owed by public sugar mills, a significant move that follows parliamentary approval and aims to revitalize the country’s sugar sector.
President William Ruto acknowledged the resolutions made by both Houses during a meeting at the State Lodge in Kisumu, marking a crucial step in the government’s efforts to reform the sector.
The National Treasury is now working to waive tax penalties and interest within the next 30 days, as was agreed upon by the Cabinet.
Additionally, the government has revealed plans to unveil a strategy for settling arrears owed to farmers and employees within the next three months.
The total debt owed by the sugar companies is substantial, amounting to Sh117 billion, which includes debts from bank loans, tax arrears, penalties, and dues to farmers and employees.
Of this amount, Sh65 billion is owed to banks, Sh50 billion in taxes, and nearly Sh2 billion in unpaid dues to farmers.
The Cabinet’s decision to write off these debts represents a significant step toward revitalizing the sugar sector, which has faced financial challenges.
Additionally, the Cabinet has given the green light to publish requests for proposals for the leasing of the five state-owned sugar mills.
This initiative aims to restructure the sugar sector and increase its efficiency and competitiveness.
Recent developments also highlight the efforts of governors representing counties within the Lake Region Economic Bloc (LREB), who are advocating for the reintroduction of the Kenya Sugar Board and the revitalization of farming in the region.
The discussions revolved around the need to separate the sugar sector from the oversight of the Agricultural Food Authority (AFA), which currently oversees all crops in the Ministry of Agriculture.
Governor Fernandes Barasa of Kakamega County emphasized the importance of addressing this challenge and highlighted the sector’s determination to overcome various obstacles hindering the viability and rejuvenation of the sugar industry.
In the past, the Kenyan government waived Ksh.11 billion (US$103.4 million) in tax arrears that the troubled state-owned sugar mill, Mumias Sugar, owed to the Kenya Revenue Authority (KRA) in an effort to revive the ailing sugar sector.
Meanwhile, sugar production is set to normalize following the decision by the Agriculture and Food Authority (AFA) to lift the ban it had imposed on milling operations in the country.
AFA is a Kenyan agricultural regulatory body with a sugar directorate responsible for conducting market surveillance to ensure sugar millers adhere to trade practices, sugar industry legislations, and regulations, as well as registration of sugar millers.
