The politics behind Mumias’ Sh1bn bailout

Opinion and Analysis

Mr Coutts Otolo, the Mumias Sugar Company acting chief executive officer. PHOTO | FILE 

By JOSEPH BARASA

In Summary

• Sugarcane miller’s road to recovery marred by politics, which may in the long run lead to its collapse.

The release on Monday of the remaining Sh500 million of the Sh1 billion earmarked to bail out cash-strapped Mumias Sugar Company was a victory of sorts for western Kenya politicians who have been engaged in behind-the-scenes lobbying in recent months.

Deputy President William Ruto promised western Kenya MPs that the government would release the money more than three months ago.

Sources close to western Kenya MPs, who have been pushing for the bailout, said the two principals of the Jubilee coalition were initially expected to release the money on Wednesday during Mr Kenyatta’s tour of the region, which coincides with this year’s annual Kakamega Agricultural Society of Kenya (ASK) show.

The MPs have in recent months lobbied the Jubilee government, which has an interest in winning the huge western Kenya vote in the 2017 elections.

Salvage

The bailout, which Mumias has been pursuing for more than a year, is badly needed to salvage the sinking manufacturing giant, particularly in restoring the confidence of contracted cane farmers who have not been paid since last July.

Delays in paying these dues, worth hundreds of millions of shillings, and the ongoing sugarcane poaching crisis largely targeting Mumias’ contracted farmers have only helped drive the last nail in the company’s coffin.

Without raw materials, Mumias’ prospects for recovery remain bleak.

But even as Mumias gets the money, the core issue remains whether it will land in the right hands and ultimately get invested wisely — and not fall in the sticky hands of rogue managers and politicians, who brought the company to its knees in the first place.

Mumias was no doubt brought down by forces within and without the company who must be hunted down and eliminated before any lasting recovery can happen.

Since Peter Kebati, who succeeded Evans Kidero as chief executive, was sent packing, the company’s financial position has deteriorated rapidly, taking it deep into the loss-making territory of Sh1.4 billion from Sh73 million.

Former Mumias top managers recently claimed in court that the company had by April last year made Sh541 million from the controversial sugar imports — bringing into focus some underlying management issues.

It must be remembered that the sugar industry is critical to the economic well-being of western Kenya. This is a crop that has over the decades directly and indirectly touched the lives of more than half of the region’s population and who are totally dependent on Mumias.

This explains why fears that the industry might collapse is making waves in the region’s economic and political circles.

The most critical question, however, remains who will save western Kenya from this impending economic ruin and what the political and social consequences will be.