Leaders welcome move to settle debts for sugar companies

President Uhuru Kenyatta (second right) and Ministry of Industrialization and Enterprise Development Cabinet Secretary Adan Mohamed at the Wrigley Stand, during the Nairobi International Trade Fair. Leaders have welcomed President Uhuru Kenyatta’s announcement that the government will release Sh39.7 billion to prepare the sugar sector for privatisation. PHOTO | NATION MEDIA GROUP 

In Summary

• The President made the announcement at the Nairobi International Trade Fair on Friday, shifting the debate from the agreement that Kenya signed to import sugar from Uganda that the leaders from the sugar-growing areas, especially opposition leaders, criticised.
• According to Mr Obwocha, the privatisation of Nzoia, South Nyanza (Sony), Chemelil, Muhoroni and Miwani sugar factories is in the final stages and the debt write-off has come at a good time in the exercise.
• The President said the revival plan was costly but a “bitter pill to swallow to improve farmers’ lives by enabling them [to] earn from sugarcane farming”.

By SUNDAY NATION TEAM
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Leaders have welcomed President Uhuru Kenyatta’s announcement that the government will release Sh39.7 billion to prepare the sugar sector for privatisation.

The President made the announcement at the Nairobi International Trade Fair on Friday, shifting the debate from the agreement that Kenya signed to import sugar from Uganda that the leaders from the sugar-growing areas, especially opposition leaders, criticised.

“It is a boost to what we are currently doing to privatise the millers that has also been approved by Parliament and the Cabinet,” Privatisation Commission Chairman, Henry Obwocha, said.

According to Mr Obwocha, the privatisation of Nzoia, South Nyanza (Sony), Chemelil, Muhoroni and Miwani sugar factories is in the final stages and the debt write-off has come at a good time in the exercise.

“We are in the final stages of consultation and approval by the Senate and the agriculture committee of the National Assembly,” Mr Obwocha said.

“This announcement now speeds up the process. Once we obtain the approval of the Senate and the agriculture committee we will go to the next stage of calling for Expression of Interests from investors who are interested in investing our local sugar factories.”

The government expects to sell 75 per cent stakes in each of the five millers.

TURNAROUND STRATEGY
Mr Obwocha said those expressing interest must have operated sugar factories elsewhere successfully for between 10 and 20 years.

“Only those that meet that criteria would be requested to submit their bids,” he said, stating that the privatisation should be concluded by February 2016.

While welcoming the bailout, Migori Governor and former Kenya Sugar Board Chairman Okoth Obado asked the government to allow counties to take the lead in the privatisation of the millers.

“Constitutionally, agriculture is a devolved function and the counties in which the millers are located are best placed to deal with the problem of farmers as well as the factories,” he said.

Butere MP Andrew Toboso hailed the move but cautioned that a proper approach is required to turn around the sugar industry.

“It is a good initiative that must however be supported by a well-thought-out turnaround strategy for the sugar factories. We shouldn’t throw bad money at bad money,” he said.

In his speech at the Nairobi International Trade Fair on Friday, President Kenyatta said the government would release Sh39.7 billion to settle all the debts owed by sugar factories listed for privatisation.

FINANCIAL TROUBLES
The President said the revival plan was costly but a “bitter pill to swallow to improve farmers’ lives by enabling them [to] earn from sugarcane farming”.

The Secretary-General of the Kenya Federation of Sugarcane Farmers, Ezra Okoth, thanked Mr Kenyatta for the move.

Mr Okoth asked the government to consider writing off loans that farmers took from Agricultural Finance Corporation – Sh500 million – after the 2008 post-election violence.

The loans, Mr Okoth said, has been accruing interest at a rate of five per cent per annum and make sugarcane farming unsustainable.

Speaking separately at funerals in Matungu and Butere Saturday, Khwisero MP Benjamin Andola and Ford Kenya national youth leader Bernard Wakoli said debt-ridden factories and farmers will now be relieved of huge production costs as well as exorbitant taxes.

“It is a step in the right direction but we urge the government to inject more funds in reviving Mumias Sugar company since the Sh1 billion released a couple of months ago to the firm was a drop in the ocean,” Mr Wakoli said.

Meanwhile, farmers in western Kenya have attributed the Sh4.6 billion by Mumias Sugar to financial troubles that saw the miller bailed out by the government.

Report by John Shilitsa, Justus Wanga and Walter Menya