The government has officially concluded the long-awaited leasing of four state-owned sugar factories, marking a major milestone in the bid to revive Kenya’s struggling sugar industry.
Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe announced that the operations of Nzoia, Chemelil, Sony, and Muhoroni sugar companies have been handed over to private millers under 30-year lease agreements.
Under the new arrangement:
- West Kenya Sugar Company will manage operations at Nzoia Sugar,
- Kibos Sugar and Allied Industries takes over Chemelil Sugar,
- Busia Sugar Industry Ltd has been assigned Sony Sugar, and
- West Valley Sugar Company will operate Muhoroni Sugar.
CS Kagwe said the move is expected to inject efficiency, investment, and innovation into the ailing sector, which has long been plagued by mismanagement and underperformance.
“Stakeholders in Kisumu, Parliament, and even the courts agreed—leasing was the right model. This is not just about turning profits; it’s about restoring dignity to the thousands of families that depend on sugar farming and processing,” he said.
The leasing model, Kagwe explained, was a departure from the previously proposed privatization route that was rejected after further public participation and legislative review.
He said plan now is to let private operators bring in capital, expertise, and efficiency, while the government focuses on oversight and accountability.
“The sugar sector has drained billions from taxpayers over the years. Now it’s time we let strategic investment drive its transformation,” Kagwe added.
As the four millers settle into their new roles, the government has reassured farmers, workers, and the public that it remains firmly committed to supporting the sector’s revival.
“This is a shared journey,” Kagwe concluded.
“We have made a bold step, and with continued public support, the sugar belt will thrive once again.”
Kagwe said the leasing is a product of extensive stakeholder engagement dating as far back as 2015.
From Parliament and county leaders to farmers and factory workers, Kagwe said all parties were involved in shaping a leasing model aimed at reviving the ailing industry without losing public ownership of key assets.
“This decision was not made in haste. It follows years of public consultation, legislative approvals, and even legal scrutiny,” said Kagwe.
“What we are doing is giving these factories a fighting chance to stand again, for the sake of our farmers, workers, and the country’s economy.”
The government has also moved to address the pain points of the sector—unpaid debts to cane farmers and factory workers.
Last year, the state cleared over Sh1.7 billion in arrears owed to farmers. However, since then, the factories have accumulated an additional Sh500 million in unpaid deliveries, which the government now pledges to pay in July 2025.
On the side of workers, the burden has been heavier.
Out of Sh5.3 billion owed in unpaid salaries and benefits, only Sh600 million was cleared last year. That figure has now ballooned to an estimated Sh5.6 billion.
To manage this, the Ministry has entered into a Memorandum of Understanding with the Kenya Union of Sugar Plantation and Allied Workers (KUSPAW).
Under the agreement, there will be a 12-month transition period during which the new lessees will assess and decide on the workforce needed.
During this time, the government remains responsible for all unpaid salary arrears, pensions, and statutory deductions.
“We will begin with Sh1 billion in May—Sh600 million for partial arrears and Sh400 million to cover current salaries. Another Sh1.5 billion will follow in July, with quarterly payments of Sh1.17 billion continuing until June 2026,” said Kagwe.
He stressed that while the factories are being leased out, public assets are not being sold given that land and infrastructure remain under the government, with leases pegged to market rates and revenues channeled through the Kenya Sugar Board for reinvestment in local communities and cane development.
