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Only the upright should run sugar factories

By Omulo Okoth
Monday, August 10th, 2020
Sugarcane farming. Photo/Courtesy
In summary

Investors bidding to lease five state-owned sugar companies have been made public.

Now is the time to engage stakeholders in the next stage of this exercise, and that is to undertake serious vetting and due process. 

Cognisant of the sensitivity of this matter, its impact on the local economy and political ramifications, Kisumu Governor Anyang’ Nyong’o’ and his Kakamega counterpart, Wycliffe Oparanya, while supporting the move to waive debts owed by the firms, had called on the government to postpone privatisation of sugar millers.

The National Government has waived all debts by the millers amounting to nearly Sh100 billion as recommended by a report on the Sugar Task Force. 

The five factories earmarked for privatisation are Muhoroni, Nzoia, Chemelil, Miwani and Sony Sugar Company Limited.

The Agriculture Ministry has received bids from 29 companies interested in running the companies on lease terms following recommendations by the Sugar Development Reforms Task Force aimed at reviving the ailing sector.

West Kenya Sugar Company and Sukari Industries, which is running the factory in Riat Oria, Ndhiwa, is among them.

Others are China CAMC Engineering Company Limited, Shenzhen Start Instruments, Mehta Group, Kibos Sugar, Butali Sugar Mills, Mini Bakeries and Kuguru Food Complex.

“The next stage that will follow will be evaluation of the bids after which those ones that will qualify will be asked present their proposal from which we shall pick the winners,” Benjamin Tito, chairman of the tendering committee told reporters last week.

Agriculture Cabinet Secretary Peter Munya added his voice to the matter saying: “...we want to attract and finally secure only those investors we think are serious and worthy enough to partner with the government in the revival of the sugar industry.”

The next phase of this exercise should be anchored on objectivity, fairness and transparency.

Efficiency and financial stability is key. Let the shortlisted companies tell the public how they plan to revamp the industry.

It cannot be business as usual where companies that have impoverished farmers are given priority due to political connections.

We should aim at producing enough  sugar for local consumption and export the surplus to Africa Free Trade Area.

But this cannot be realised if our choice of investors is compromised by corruption.

Figures should be obtained from regulatory bodies like Kenya Sugar Board in respect of international players.

The criteria should be on performance, efficiency deliverables in addition to financial stability.

After all, CS Munya had said the government is looking for investors with world-class experience to redevelop the factories into large sugar complexes and manage them over a leasehold period of 25 years.

They will not just produce sugar, but diversify into power generation, production of ethanol and other sugar by-products.

This is the only chance to get things right to save the sugar industry, upon which up to 10 million Kenyans depend. 

Strict vetting and due diligence should be put in place to ensure we end up with companies of repute.

Where shareholding is done by an interested group, for instance, the shareholding structure must be declared at the outset so that no cartels sneak in.

Sugar companies have been sagging under the weight of mismanagement and theft as those charged with the responsibilities of oversight looked the other direction, because they benefitted from the scam. – The writer is a veteran journalist, and syndicated writer