Govt says not to blame for slow sugar reforms

May 4, 2011
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, NAIROBI, Kenya, May 4 – The Agriculture Ministry has absolved itself from blame over the slow pace of the reforms in the sugar sector ahead of the full liberalisation in February next year.

Agriculture Permanent Secretary Dr Romano Kiome said the ministry had done everything that it needed to do to ensure that the privatisation of five sugar mills is completed before the expiry of the COMESA safeguards next year.
 
"We are somewhat worried about the process.  We have done everything possible on our part to provide the information required and the action required so that we can go to privatisation because we know the risks of coming to the period when the COMESA provisions end is very high," the PS said.

 
He was the referring to the influx of cheap sugar from the COMESA member states that will be witnessed in the market come next year and which spells doom for uncompetitive sugar factories and consequently the farmers and their households.

The process to restructure the Nzoia, Miwani, Sony, Chemelil and Muhoroni companies started as far back as seven years ago and was initially supposed to have been completed in 2007.
 
With the February 2012 deadline for the protection of the industry fast approaching, all eyes are now on the Privatisation Commission which has been accused of dragging its feet on the matter.
 
The Cabinet has already approved the process and is now required to have presented the proposal on the exercise before the Parliamentary Committee on Finance so that they can get a go ahead.
 
"The next step is for them to present a proposal to the Committee so that they can get the green light to proceed," Dr Kiome explained adding that the Commission would then be required to advertise for expression of interest for any investor that would want to be involved in the process.
 
In January last year the then Agriculture Minister William Ruto proposed that the  government would sell 51 percent of the millers to strategic investors, 30 percent of the sugar companies to farmers with the remainder being sold to the public through an Initial Public Offer.
 
The structure has however not been agreed on.
 
But while the Solomon Kitungu-led commission might be to blame, the government has also not cleared the crippling debts that dog the sugar millers. This is because the process was in part hinged on the government\’s ability to clean up the books of the factories at a cost of Sh47 billion.

This inactivity continues to heighten fears that the country\’s sugar sector will be caught napping once the protection mechanisms end.
 
In March this year, COMESA, through Secretary General Sindiso Ngwenya had expressed its satisfaction with the reform measures that Kenya is undertaking
 
While Mr Ngwenya acknowledged the privatisation is a complicated process and that the government had done quite well in the restructuring, he remained mum on whether COMESA would grant Kenya another extension.
 
It therefore remains to be seen what action both the Privatisation Commission and the government will take to avert a possible collapse of weak sugar factories and therefore the livelihoods of six million households who depend directly and indirectly on the sector.
 
Follow us TWITTER @CapitalFM_Kenya and the author at https://twitter.com/Cirunjoroge
 

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