The entrance to Nzoia Sugar Company in Bungoma County.
The government says it has finalised the leasing of four State-owned sugar factories in a move aimed at stabilising the sector that has long been plagued by inefficiencies, debt and poor management.
Agriculture Cabinet Secretary Mutahi Kagwe on Friday announced that the ministry has handed over the factories to private millers under 30-year lease agreements, following protracted negotiations, legal scrutiny and extensive stakeholder engagement.
The leasing, spearheaded by the Kenya Sugar Board and other government agencies, that involves Nzoia, Chemilil, Sony and Muhoroni sugar companies, has been in the works since 2015.
West Kenya Sugar Company has been awarded the lease for Nzoia, while Kibos Sugar & Allied Industries Limited will take over Chemelil.
Sony Sugar will be run by Busia Sugar Industry Ltd while West Valley Sugar Company Ltd will take over the management of Muhoroni Sugar Company.
“No public land has been sold or transferred. The assets remain the property of the national government. Only operations are being leased,” said Mr Kagwe, in an effort to reassure communities in sugar-growing regions.
In a statement released on Friday, Mr Kagwe confirmed that the government has signed agreements with sugarcane farmers and factory workers’ unions to address longstanding arrears.
The agreement guarantees payments before the full transition to private operators takes effect, ensuring that farmers and workers are not left behind in the shake-up.
Under a Memorandum of Understanding signed with the Kenya Union of Sugar Plantation and Allied Workers (KUSPAW), the government has committed to pay Sh1 billion in May, Sh600 million towards staff arrears and Sh400 million for salaries starting this month.
A further Sh1.5 billion will be released in July, with Sh1.17 billion expected to be paid quarterly until the end of June 2026.
Factory workers, meanwhile, are owed a staggering Sh5.6 billion in salary arrears, up from Sh4.7 billion last year. The government paid out Sh600 million last year and will now adopt a phased approach to clear the outstanding dues.
On the other hand, CS Kagwe noted that that the government has committed to settle Sh500 million by July which is owed to farmers in fresh arrears since last year’s Sh1.7 billion.
There will be a 12-month transition period during which each of the four lessees will assess their operational and workforce needs before making decisions about which workers to retain.
During the period, the ministry will remain responsible for all unpaid salaries, pensions and statutory deductions incurred up to the date of handover, said Mr Kagwe.
The government has maintained that all revenue generated from the leases will be managed by the Kenya Sugar Board and reinvested in cane development and community projects in areas surrounding the factories.
CS Kagwe pointed out that the comprehensive reform is necessary to end the cycle of dependency and turn sugar factories into viable, competitive businesses.
“The negotiated terms represent the best possible outcome to ensure the revival of the sugar sector. We urge all stakeholders to support this vision,” he said.
His assurance comes amidst the growing concerns and backlash from unions, county leaders and other stakeholders who have questioned the transparency, legality and intent of the process.
Led by Kisumu Governor Prof Anyang' Nyong’o, he called for an immediate stoppage of the process until all the legal and constitutional dictates are addressed and aligned.
"We call for urgent broad based stakeholders’ engagement, civil society participation and farmer groups to ensure a transparent inclusive process aligned with past public memoranda submitted to the privatization commission," he said.
"We firmly oppose this opaque lease plan, which ignores the social fabric, existing infrastructure and public interests in sugar belt sub-counties.,” added the county chief.
Prof Nyong’o cautioned that the plan threatens to dismantle community livelihoods and invites monopolistic exploitation.
He particularly took issues with the planned leasing of Chemelil Sugar and Muhoroni Sugar factories, which he noted have secretly been finalised without proper stakeholder involvement.
Prof Nyong’o noted as irregular for Chemelil Sugar Factory to be leased to Kibos Sugar and Allied Industries Ltd, which has only 16 years into the industry, for a period of 30 years.
He on the other hand faulted the awarding of Muhoroni, a 62-year-old company with a milling capacity of 2200 tonnes per day, to Kipchimchim Group, the operators West Valley Sugar Company.
“This company has been in operation for barely 17 months with a production capacity of 1600 tonnes and no nucleus land," he said.
