Mumias Sugar hinges on political will

Mumias Sugar Company

The entrance to Mumias Sugar Company. 

Photo credit: File | Nation Media Group

On Mumias Sugar, my appeal to President William Ruto is to inject fresh political will to bear in supporting the company’s revival. The other day, I was pleasantly surprised to see a 50-kilogramme bag of Mumias-branded sugar at a store in Kisii Town. I was also pleasantly surprised to see the new operator displaying hundreds of brand new tractors that it is deploying in cane transportation.

Even the most strident critic of the incumbent operator will accept that there is light at the end of the tunnel for the sugarmiller. Predictably, the impact of the green shoots of recovery at Mumias have spawned an explosive escalation in the perennial battles and competition for cane supplies between the four factories within that belt. It is a clear sign that competition and rivalry between hardcore cartels there is why the revival of the company is being resisted.

On paper, one can argue that the Ruto administration cannot do much about the fate of Mumias right now because the matter is in court. Yet the truth of the matter is that the protracted court battle has heavy political undercurrents.

Politically influential brothers

This is a do-or-die battle of attrition pitting two extremely wealthy and politically influential brothers—Sarbi Rai,the proprietor of the Sarrai Group, and Jaswant Rai, who owns West Kenya Sugar Company in Kakamega, Sukari Limited in South Nyanza and Naitiri Sugar in Trans Nzoia.

Were the Ruto administration to take the narrow and technical view that this is a legal matter they can do little about, they would be burying their head in the sand. Mumias can only be saved by bold political action targeted not only at disrupting schemes of self-absorbed sugar oligarchs who want the company closed permanently but offering political support to the ongoing revival effort. Otherwise, the case will drag in court for years.

I say so because the parties involved in the dispute are hardcore players—serial litigants who are adept at dilatory tactics. They have, for many years, excelled at what legal wonks call "forum shopping"—the endless filing of case upon case in different locations and in courts or jurisdictions they perceive to be likely to favour their position.

Bold political action

The history and experience is that our courts are unable to deliver justice affordably, speedily and efficiently when it comes to disputes involving competitors in the sugar sector. Without bold political action, all we will be seeing is unending and sterile court battles over creditor claims, especially about the ethanol and cogeneration plants. Which is a pity, because this is a company that, until the other day, was a systemic player and anchor of a supply chain benefiting millions of households in western Kenya.

The fate of Mumias, and of the ordinary sugar farmer in Kakamega, is in the crippling grip of Nairobi’s litigation aristocracy—brigades of elite lawyers representing dozens of creditors with interlocking interests in the matter. It has been a firing squad of court cases and weaponised litigation meant to wear down the ongoing leasing process through protracted litigation. Clearly, the ultimate intention is to wind up the company and eliminate it from existence.

Indeed, this court process has been a saga of twists and turns. We woke up the other day to an advert in the newspapers that a new receiver, by the name Mr Mirima Kireto, had been appointed by the High Court to run the affairs of Mumias Sugar. There are reports that the lease to Sarrai Group had been nullified and cancelled. It is confusing because there were pending cases in the Court of Appeal touching on the very matters.

All we will see are more orchestrated creditor holdouts. I have lost count of the number of cases in court over this matter. The number of lawyers and legal firms involved is simply mind-boggling. The point is, the answers to the revival of Mumias Sugar Company will not be delivered by those black-robbed judges and well-dressed lawyers sitting in wood-panelled courtrooms. What is going to be absolutely critical is political will to support the ongoing revival process.

I still remember how the government navigated around similar creditor hold-outs and unending litigation to arrive at a solution during the PanPaper Mills insolvency process in 2015: Noisy and litigious creditors and short-term lenders were eliminated from the scene when the government paid out short-term lenders and took over their positions at the negotiating table.

Can we start thinking around how to navigate around the creditors of both the ethanol and co-gen plants? KCB Bank’s securities don’t extend to these assets. This is the loophole.