Five sugar factories to be sold after Cabinet gave its approval

The privatisation of five sugar factories is now in the hands of Parliament after the Cabinet gave its approval.

The government will, however, have to restructure the debt portfolios before disposing of the firms. But some players in the sugar industry are sceptical of the planned privatisation, saying farmers are not prepared to own the factories.

Mr Michael Arum, the coordinator of Sugar Campaign for Change said farmers have not been educated on what it means for them.

Mr Arum warns the sector could collapse because the government had failed to put its affairs in order before Comesa states start bringing in the commodity duty free in January 2012.

“We only have one year to privatise our sugar factories while farmers have no money to buy shares as they have continued to be exploited by sugar factories,” said Mr Arum.

The factories set for privatization are Miwani, Nzoia, Muhoroni, Chemelil and Sony. Some are heavily indebted while Miwani and Muhoroni are under receivership.

Kenya sugar board chairman Zachariah Obado said the government approval was long overdue saying that once privatised the factories will be more competitive.

Mr Obado asked parliament to write off Sh42 billion debts the companies owe the government and the Kenya sugar board.

He acknowledged that farmers may not have cash to buy the shares and asked the government to allow the debts sugar millers owe farmers to be turned into shares.
Farmers are supposed to acquire 30 per cent shareholding in the factories. The privatisation Commission has recommended that farmers be given up to three years to fully take up the shares.

Agriculture minister Dr Sally Kosgei maintains the government will ensure that domestic sugar self-sufficiency is achieved and the industry becomes more competitive globally and regionally.