This archive report was first published on 21 August 2020.
Kenya's sugar sector has been struggling for over a decade, with five state-owned sugar mills experiencing loss-making streaks. The government has proposed leasing these mills to strategic investors to improve their competitiveness and return them to profitability.
According to the Kenya Private Sector Alliance (KEPSA), leasing the sugar mills will benefit all stakeholders across the value chain, including suppliers, transporters, production, service and support extension workers, and farmers in the respective regions.
KEPSA CEO Ms Karuga welcomed the government's move to restructure and lease the firms, stating that the sector will return to profitability with the right strategic investors on board.
Ms Karuga added that leasing out the mills will enable the private sector to mobilize resources to rehabilitate and modernize existing facilities, improve financial, technical and operational expertise, bring in efficiency, and return the mills to profitability.
The proposed privatization move involves leasing the factories for at least 25 years, operating them, and producing sugar as private entities while the Government will continue owning the assets.
Kenya's sugar sector is facing stiff competition from other agricultural sectors, such as tea and coffee, which are great contributors to the country's GDP. The impending end to sugar import quotas from COMESA has made it even more challenging for Kenyan millers to compete with their rivals.
