Kenya Government Provides Sweetener For Sugar Companies

Kenya has written off 39.7 billion shillings ($381 million) owed by state-owned sugar companies, aiming to ease their planned privatisations, President Uhuru Kenyatta said on Friday.

The government in May approved the sale of the government’s holdings in five sugar companies and said it expected to sell 75 percent stakes, in transactions to be completed in the following nine to 12 months.

“My Government has had to take a hard decision to support the sector,” Kenyatta said in a speech at a trade fair in Nairobi.

The five companies – Nzoia, South Nyanza, Chemelil, Muhoroni and Miwani – are in need of 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.

East Africa’s biggest economy, struggling to improve output amid relatively high production costs, produces 600,000 tonnes of sugar a year, compared with annual consumption of 800,000 tonnes. The deficit is covered through the strictly controlled imports from COMESA.
Yet the domestic industry is enduring tough times and the leading producer, Mumias Sugar, earlier this week posted a 6.31 billion shillings ($60 million) pretax loss for the year through June, hurt by falling revenue due to lower production volumes.