Kenya Secures Sh12.29 Billion Private Investment to Revive Four State-Owned Sugar Mills
Nairobi, The Gulf Observer: Kenya’s Ministry of Agriculture and Livestock Development has announced a Sh12.29 billion investment deal with private firms to revive four struggling state-owned sugar mills: Nzoia, Chemilil, Sony, and Muhoroni. The investment follows the award of 30-year leases aimed at restoring operational capacity, stabilizing farmer incomes, and preserving jobs in the sugar sector.
Speaking at a media briefing, Agriculture Cabinet Secretary Mutahi Kagwe said the initiative is part of the government’s broader agenda to breathe new life into the sugar industry.
“The funds will be invested directly into the four mills to ensure that they are operational and can meet their threshing and sugar production capacity,” said CS Kagwe.
Investment Breakdown and Strategic Goals
- Nzoia Sugar: West Kenya Sugar Company to invest Sh5.76 billion
- Chemilil Sugar: Kibos Sugar & Allied Industries Ltd. to invest Sh4.5 billion
- Muhoroni Sugar: West Valley Sugar Company Ltd. to invest Sh1.02 billion
- Sony Sugar: Busia Sugar Industry Ltd. to invest Sh1 billion
In addition to the direct investments, the four firms will pay a combined goodwill fee of Sh521.97 million for the leased land, and annual lease fees dedicated to cane development and community welfare programs.
Boosting Farmer Incomes and Clearing Arrears
The revitalization plan includes increasing cane demand and enabling mills to function at full capacity, which is expected to significantly boost farmer earnings. Kagwe also revealed that:
- The Kenya Sugar Board (KSB) will collect Sh1.5 billion in concession fees for sugar and Sh240 million for molasses, calculated at Sh4/kg and Sh3/kg respectively.
- These fees will be redistributed to farmers as annual bonuses, based on the volume of cane supplied.
To resolve historical debt issues:
- Over Sh1.7 billion has already been disbursed to settle farmer arrears.
- An additional Sh500 million will be paid in July.
- Sh1 billion has been allocated to cover worker salaries and arrears, including Sh600 million for staff payments and Sh400 million for six months of salaries starting May 2025.
- A further Sh1.5 billion will be paid in July, followed by quarterly payments of Sh1.17 billion to fully clear outstanding wage arrears.
Transparent Leasing Process
CS Kagwe emphasized that no factories have been sold, and the leasing process was carried out transparently with parliamentary oversight and input from farmers, unions, Members of Parliament, and county leadership.
“We are ready to provide documentation to Parliament and the public to ensure complete transparency,” he affirmed.
The government sees this revival plan as a major step toward restoring Kenya’s sugar industry as a viable economic driver, safeguarding thousands of jobs and enhancing livelihoods across sugar-growing regions.
