KENYA – In a move towards revitalizing the struggling sugar industry, the government has initiated the process of disbursing Sh6.94 billion (US$42.72M) owed to farmers and staff of four public sugar factories.
The beneficiaries include those associated with Muhoroni Sugar Company, Nzoia Sugar Company, South Nyanza Sugar Company, and Chemelil Sugar Company.
The announcement was made by the Ministry of Agriculture and Livestock Development on Friday, urging eligible individuals to provide their bank details for the upcoming disbursement.
Agriculture Principal Secretary Dr. Kipronoh Ronoh said, “This is to request the farmers and staff to urgently confirm their bank details with the management of the sugar factories in readiness for disbursement of the verified arrears.”
The move follows parliamentary approval for the leasing of five state-owned sugar companies, signaling a pivotal step in the government’s commitment to rejuvenate the sector.
Paul Rono, State Department for Agriculture PS, said, “Following the approval by Parliament for leasing of the five sugar companies and payment of all farmers and staff arrears as per Certificate No.039/13th/2023 from the National Assembly, the government concluded the audit of debts and is now ready to pay the arrears.”
However, farmers and staff associated with Miwani Sugar Company, which ceased operations in March 2001 and is also slated for leasing, will be excluded from the payments pending the resolution of ongoing court cases.
The outstanding debts of the sugar companies are substantial, with Nzoia Sugar Company leading at Kes2.11 billion (US$12.99M), followed by Sony at Kes2.05 billion (US$12.62M), Chemilil at Kes1.38 billion, and Muhoroni at Kes1.39 billion (US$8.49M). In total, the five state-owned sugar companies carry an outstanding debt burden of Kes128.07 billion (US$788.27M).
Chairman of the Agriculture and Livestock Development Committee of the National Assembly, Dr. John Mutunga, said, “The government has provided money to redeem farmers’ long-term indebtedness.”
Kenya has been grappling with a widening gap between sugar production and demand since the mid-1980s. The financial strain on public millers, compounded by aging infrastructure and outdated technologies, has hindered their ability to compete with well-capitalized private counterparts.
Influx of Imports
Meanwhile, sugar prices in the country eased by about Kes5 (US$0.031) per kilogramme to hit the lowest level in five months last November.
The drop was driven by an influx of imports that helped offset a slowdown in local production. Data from the Sugar Directorate shows prices eased to Kes213 (US$1.31) per kilogramme on average during the month compared to Kes218 (US$1.34) in October.
The price drop followed a significant jump in sugar imports, which increased by 51.3 percent to 90,759 tonnes in November, the highest since last March.
As a result, the total quantity of sugar supply in the market including that produced locally hit 113,495 tonnes, also the highest since March and an increase of 37 percent from October.
In November, Kenya was granted a two-year extension to control imports of cheap sugar into the country. The aim of the extension was to allow the government in Nairobi implement the much-needed sector reforms.
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