State abandons proposal to privatize sugar firms

The government is now leaning toward a leasing model, according to Deputy President Rigathi Gachagua, who stated that Kenyans and sugarcane farmers are not enthusiastic about the privatization of any of the State-owned sugar firms.
The Kenyan people and farmers in the sugar belt were given full public involvement consideration by the Ministry. As a result, Mr. Gachagua stated during a meeting of the intergovernmental budget and economic council on Monday that they are not interested in privatization and would rather use a leasing model.
He mentioned that the Ministry of Agriculture had agreed to the requests of the people and was working with Attorney-General Justin Muturi on how to actualise the leasing model. “We have agreed that the leasing model would be developed using the AG’s insight into how those sugar mills and nuclear farms can be leased for the advantage of those counties and the residents who live there,” he said.
The ministry said that five court lawsuits challenging the privatization proposal had been resolved and rejected, according to the Deputy President. Three cases are still pending in court, though.
Early last month, Mithika Linturi, the cabinet secretary for agriculture, made an effort to reassure leaders and farmers from the sugar-belt region that the government would not privatize any State-owned sugar millers, arguing that there were other methods to address the struggling sugar business and bring it back to profitability.
He claimed that those driving the privatization had ulterior motives, including snatching up land near the factories. According to the Cabinet Secretary, the government is committed to making sure that sugar millers are back in operation, producing enough sugar to meet demand while also helping the farmers.
Chemelil Sugar, South Nyanza, Nzoia, Miwani, and Muhoroni are just a few of the struggling State millers that were slated for privatization. They were advised to be privatized by a task team that former President Uhuru Kenyatta had set up in order to prevent their impending collapse.
The Privatization Bill 2023, which seeks to speed up the process of selling State-owned corporations and parastatals by avoiding parliamentary approval in the sale of public companies, was approved by President William Ruto’s Cabinet in March. This bill, which seeks to shorten the process of selling State-owned corporations and parastatals by bypassing parliamentary approval in the sale of public companies, has faced opposition from a variety of stakeholders.
The privatization idea was criticized by leaders from the sugar-belt region, who said that it would be ineffective since it mainly served the interests of “corruption cartels.”
The idea, according to Vihiga Senator Godfrey Osotsi, is a well-orchestrated scam intended to benefit a select few at the expense of thousands of citizens who depend on sugarcane growing.
He argued that since some of the factories are located on community-owned land, locals have a right to be engaged in any plan to sell them.
His Kakamega counterpart, Boni Khalwale, claimed that preventing the importation of cheap sugar, rather than privatizing the millers, was the best way to salvage the struggling sugar industry. President Ruto stated in April that his administration will write off the debts owed by the five sugar mills and Mumias Sugar Company, which total up to Ksh60 billion.
“I’ve ordered the return of the sugar factories to the locals. We want to shift the narrative, make sure the millers start making money, and provide jobs for our people.” said Dr.Ruto
Since 2015, when the Privatization Commission approved the sale of the government’s holdings in five sugar companies, plans have been in the works to privatize the crippled sugar firms. The five financially troubled State-owned sugar mills would be leased to private investors, according to former Agriculture Cabinet Secretary Peter Munya, who made the claim in 2020.
Prior to the State’s anticipated exit from the sugar industry, the action was intended to revitalize their operations. He noted that as part of the arrangement, the government had granted the companies amnesty for loans totaling Ksh58 billion and a tax bill totaling Ksh4 billion due to Kenya Revenue Authority, including interest and penalties for past-due taxes.
However, due to criticism from numerous stakeholders, the proposal did not succeed.
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