NAIROBI, Kenya, May 10 – The government has finalized the leasing of four state-owned sugar factories to private millers in a bid to revive the ailing sugar industry.
The Ministry of Agriculture and Livestock Development has signed agreements with sugarcane farmers and workers’ unions to settle arrears ahead of the handover.
The four mills, Nzoia, Chemelil, Sony, and Muhoroni, will be leased for 30 years to West Kenya Sugar Company, Kibos Sugar & Allied Industries, Busia Sugar Industry, and West Valley Sugar Company, respectively.
The government pledged to clear Sh500 million owed to farmers for cane delivered since 2024, with payment due in July 2025. This is in addition to Sh1.7 billion paid to farmers last year.
For workers, Sh600 million was paid in 2024 out of Sh5.3 billion owed. The debt has since risen to an estimated Sh5.6 billion.
Under a Memorandum of Understanding signed with the Kenya Union of Sugar Plantation and Allied Workers (KUSPAW), the government will pay Sh1 billion upon lease takeover in May 2025, and release Sh1.5 billion in July 2025 for salary payments.
A 12-month transition period will allow the lessees to determine workforce requirements, while the government retains responsibility for all unpaid salary arrears, pensions, and statutory contributions up to the handover date.
The leasing model follows extensive consultations with stakeholders, including MPs, governors, and sugarcane farmers, and was approved by the Cabinet and Parliament. The decision replaces an earlier privatization plan approved in 2015.
In 2023, Parliament endorsed the leasing framework after nationwide public participation. Legal challenges against the process were also dismissed, with the High Court affirming that the Public Private Partnership Act, not the Privatization Act, governed the leasing process.
The Ministry emphasized that all land and assets will remain public and that leases will be renewed annually at market rates. Proceeds from the leases will be managed by the Kenya Sugar Board for reinvestment in local communities and cane development.
“The negotiated terms represent the best outcome for a sustainable sugar industry,” said Cabinet Secretary for Agriculture and Livestock Development Sen. Mutahi Kagwe.
“We urge all stakeholders to support this transformation.”
