Kenya government writes off sugar firms debts ahead of privatisation
The government has written off Sh39.7 billion owed by State-owned sugar companies to ease their planned privatisations, President Uhuru Kenyatta has said.
The government in May approved the sale of the government’s holdings in five sugar companies and said it expected to sell 75 per cent stakes, in transactions to be completed in the following nine to twelve months.
“My government has had to take a hard decision to support the sector,” he said in a speech at a trade fair in Nairobi.
President Uhuru said Nzoia Sugar Company, South Nyanza, Chemelil, Muhoroni and Miwani need modernisation to survive competition from the entry of other sugar producers and an impending end to sugar import quotas from the Common Market for Eastern and Southern Africa (Comesa) trade bloc.
Kenya struggles to improve its sugar output amid relatively high production costs, produces 600,000 tonnes of sugar a year, compared to annual consumption of 800,000 tonnes where the deficit is covered through the strictly controlled imports from Comes.
However, the domestic industry is enduring tough times since the leading producer Mumias Sugar posted a Sh6.31 billion pre-tax loss for the year ending June hurt by falling revenue due to lower production volumes.
Since March, the government has only given Sh1 billion as part of the bailout but ad pledged to give Sh5 billion to aid the cash-strapped miller as it implemented a reorganisation involving heavy job cuts.
“Let me reiterate that my government will do all in its power to help the cane sector get back on its feet, and to preserve the livelihoods of our people,” Uhuru said, adding that in return, I expect to see accountability and diligence from those concerned parties.