KENYA – Private investors in the Kenyan sugar sector are breathing a sigh of relief after the National Assembly Agriculture Committee rejected the proposal to have sugarcane farmers as the majority shareholders in privatized state-owned sugar mills, saying it would be unfair to the private investors.

Navakholo MP Emmanuel Wangwe, the sponsor of the Sugar Bill 2022, had also proposed that farmers get 51 percent representation on the boards of directors of the privatized companies and the creation of a Sugar Development Fund as a kitty to support cane farmers develop the crop for milling by factories.

However, Tigania West MP Mutunga Kanyuithia, a committee member, said in a report tabled before the House that sugar mills cannot be compelled to give 51 percent shareholding to growers.

“This will discourage investment in the sugar industry. It is unfair to force private milling companies to have growers on their boards of directors,” the committee said in the report due for consideration in plenary.

The decision was arrived at after the committee heard all sides of the sector’s stakeholders including protestations by the Kenya Association of Manufacturers, West Kenya Sugar, and Sukari Industries among others.

 “This should not be admissible in the privately-owned mills where the growers are not investment capital contributors…will discourage private investment in sugar mills,” KAM said.

According to West Kenya, the shareholding and directorship of sugar companies should be in accordance with the ownership structure, which KAM added that it would not be applicable to compel investors to have another majority party to manage their investment and may lead to legal tussles once implemented.

At the same time, the Agriculture Committee has rejected the proposed plan by governors to license sugar factories, jaggery mills, or sugar warehouse operators within their jurisdiction.

In a submission to the committee, the Council of Governors said: “The function of licensing millers belongs to the county government, and it is their mandate to license the millers within their jurisdiction.”

The committee, however, directed that it is the responsibility of the Kenya Sugar Board (KSB) to license sugar and jaggery mills and not county governments.

The governors wanted KSB to be only mandated to issue export and import licenses, holding that the same was under the purview of the national government.

Regarding the sugar development levy charged on millers and other players in the sugar value chains, the legislators want the funds to be maintained by the Commodities Fund, which already has a sugar development fund within it.

“The fund does exactly what the sugar fund is proposed to do. The committee proposes to entrench the Commodities Fund in law,” the committee said.

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