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Factory under maintenance.

Photograph: Wamara Studio


Charity Afeti

Research Assistant

October 9, 2023
Nairobi, Kenya.

The Kenyan government steps up to revive ailing sugar sector

The government of Kenya is finally making decent steps toward reviving the country's ailing sugar industry, which has seen millers operate on losses for the past decade. The sector will undergo a crucial turnaround by implementing the Sugar Bill 2022, now under the second Parliamentary reading. In the initial stage of its publication and first parliament reading, the bill received majority support from industry stakeholders and the government. It will go through the third reading for final approval before it assents and gets implemented.The Sugar Bill seeks to restore the powers and roles of the Kenya Sugar Board, which was dissolved and replaced with a directorate under the Agriculture and Food Authority (AFA) in 2013. Under AFA, the Sugar Directorate lacks the mandate to directly handle challenges in the sugar industry, subjecting farmers and millers to exploitation. The return of the sugar board will translate to increased industry funding and enhanced powers of the regulatory body. It will institute reforms and set regulations to improve miller and cane grower profits. Other critical clauses in the bill are;The reinstatement of the Sugar Act, revoked through the enactment of the Crops Act 2013.The re-introduction of the Sugar Development Levy to promote development in the sugar sector.The enhancement of sugar marketing and trade by increasing production.Reduction of the cost of production.Privatization of public sugar mills to improve their efficiency, proper coordination of sugar importation, and ending sugar smuggling and dumping.

"If the Kenya Sugar Board is reinstated, it will autonomously address issues affecting individual players in the sector and act as an intermediary between the growers, millers, and the government. "

Two parliamentary committees are already engaging industry shareholders on approaches to resuscitate five troubled public sugar factories crippled by colossal debt accumulation, poor management, and old factory milling equipment. The committee will present a proposal for parliamentary approval before the third reading of the sugar bill. The report will highlight short-term and long-term measures to institute reforms for the industry's rejuvenation. One of the short-term approaches is the payment of cane growers' long-standing dues to dissuade them from shifting to more profitable crops. The industry's long-term focus centers on addressing the persistent cane shortage issue that has seen millers halt crushing activities for the better part of Q3 and Q4 of 2023.Last month, the government agreed to adopt commercialization of the factories, placing them under a lease and operating framework. This move ensured the mills remained under government ownership to protect millers and farmers from exploitation by private investors. In addition, the president announced plans to write off Ksh 117 billion (approximately USD 799.9 million) in debts accrued by the five sugar factories. This step will speed up and smoothen the companies' revamp process to bring them back to profitability.

"In August 2023, the government shelved plans to permanently privatize five under-performing state-owned sugar producers: Nzoia, Miwani, Chemelil, Muhoroni, and Sony Sugar."
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