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Treasury CS Mbadi defends privatisation of four sugar millers
National Treasury CS John Mbadi when he appeared before the Senate Finance and Budget Committee at the County Hall Nairobi on March 18, 2025.
Treasury Cabinet Secretary John Mbadi has defended the government's decision to lease four state-owned sugar millers, saying the move is intended to benefit cane farmers.
Mr Mbadi said many government-owned sugar companies have long struggled with financial challenges due to poor management.
He added that some of the millers have been unable to sustain operations or pay workers and suppliers on time.
“The only solution to saving these factories from collapse is to have them managed by private investors,” he said.
According to the CS, problems at state-owned millers date back to the late 1960s.
The entrance to Mumias Sugar Company.
“The challenges began when cane production declined. Poor management and chronic delays in paying workers and suppliers made things worse,” he explained.
Under a 30-year lease agreement, the government has handed over several state-owned sugar millers to private investors. The new management structures took effect over the weekend.
However, the move has sparked resistance from political leaders, workers, and local communities, many of whom say there was insufficient stakeholder engagement during the transition.
Among the companies handed over are Mumias Sugar Company, South Nyanza Sugar Company (Sony), Muhoroni, and Chemelil.
West Kenya Sugar Company will manage Nzoia, while Kibos Sugar and Allied Industries Limited has taken over Chemelil.
Sony Sugar will be run by Busia Sugar Industry Ltd, and Muhoroni by West Valley Sugar Company Ltd.
Political interference
Speaking during a Wednesday morning interview on a Luo vernacular radio station, Mr Mbadi attributed the backlash to political interference.
“The government had to step in to save the millers,” he said, noting that a task force was formed to identify and address the challenges facing the sector.
He added that the task force, composed of various stakeholders, produced a report that formed the basis of the Sugar Bill 2022, which was passed by Parliament.
“The bill addressed several key issues, including mismanagement of sugar factories,” said Mr Mbadi.
He also cited the cultivation of low-yielding sugarcane varieties as a contributing factor to the sector’s decline.
“Some farmers grow cane that takes long to mature and yields little sugar,” he noted.
Privatisation, he said, became the only viable solution.
“There were only two options—selling the factories or leasing them. Leasing was the better alternative, especially since some factories sit on communal land and selling them would have triggered public outcry,” said Mr Mbadi.
He added that leasing allows the government to retain control through policy, while enabling investors to inject capital and improve operations.
A transporter offloads cane at the Kibos Sugar and Allied Industries in Muhoroni, Kisumu on June 9, 2023.
“The leasing process was competitive, with the best investors selected. The minimum investment required was Sh1 billion, but some investors are injecting up to Sh6 billion. This will help the factories pay workers and suppliers,” he said.
The CS noted that government support for the millers has already increased national sugar production from 480,000 to 815,000 metric tonnes annually. Kenya currently consumes about 1.1 million metric tonnes of sugar each year.
“The production gap is narrowing. We are confident that, in time, we’ll be able to meet national demand,” he said.
During President William Ruto’s recent tour of Migori, he told cane farmers they would begin receiving bonuses by the end of this year. Mr Mbadi echoed the president’s remarks, noting that private investment in the tea and coffee sectors has already helped farmers earn more.
“We need private players in the sugar industry as well. Farmers should focus not on who runs the factories, but on how they can benefit—through access to inputs and timely payments,” he said.
Mr Mbadi noted that sugarcane farming supports over eight million people, including transporters and factory workers.
He concluded by saying the privatisation of sugar millers is part of a broader strategy to revive the industry and create jobs.