State plans to privatise Nzoia, Chemelil, Muhoroni and Miwani companies

Agriculture Cabinet secretary Willy Bett (left) with Nandi Governor Stephen Sang during sugar privatization meeting in Kisumu on January 19th 2018. (Collins Oduor, Standard)

Governors from the western Kenya sugar belt have rejected plans by the Government to proceed with the sale of four State-owned millers in the region.

They say the process was mismanaged and want it started afresh, with the approach changed to give farmers priority.

The State plans to privatise Nzoia, Chemelil, South Nyanza, Muhoroni and Miwani companies.

In a unanimous vote, governors from more than 13 counties that form the Lake Region Economic Block (LREB) slammed the brakes on talks to have thorny issues blocking the process ironed out, which would allow the Privatisation Commission to sell off the decades-old factories to strategic investors.

Speaking in Kisumu on Friday during a consultative forum convened by the commission, Agriculture ministry and the National Treasury, the governors called for fresh consultations at individual miller level and intergovernmental talks.

This, they said, was the only way of ensuring interests of the main stakeholders – the farmers - would be addressed and the burning legal and policy questions on the process started in 2008, answered.

“We have had several of these consultations but we keep going back and forth because we have not been able to answer the question of whether we really need to privatise these millers,” said Migori Governor Okoth Obado, who chairs the Council of Governors’ Agriculture committee.

“The process itself has so far defied the Constitution because the stakeholders at the heart of the interest of privatisation (farmers) have not been consulted and the process has also disregarded the role of county governments.”

Challenges facing the millers, he said, were unique to each and grassroot discussions with the farmers, employees and political leaders on what it means to privatise the factories was the proper approach.

The fresh start, said Mr Obado, would give the devolved units the opportunity to participake in the process from the onset, clearing barricades mounted by the National Government’s hand in devolved functions.

Kisumu Governor Anyang’ Nyong’o, who chairs the LREB, said in a statement that starting afresh would give the parties involved win-win terms for the farmers, the county and national government as well as new managers of the factories.

He said as part of preparing the millers for the sale, the Government should first pump in funds to get them back on their feet.

GOVERNMENT FAILURE

Prof Nyong’o said the near-collapse of the millers was a consequence of Government failure to implement the rescue model recommended in a 2013 sessional paper guiding privatisation.

As part of the plan, the Government was to write off Sh40 billion millers’ debts, modernise the factories and control sugar importation.

Nyong’o also refuted arguments that privatisation was an avenue for strengthening competitiveness of the millers in line with Common Market for Eastern and Southern Africa (Comesa) conditions ahead of liberalisation of the regional market.

He argued that even the existing private millers were only seen as competitive because they poached cane from public firms and packaged cheaply imported sugar as their own.

“Let us not be bullied by Comesa into killing our own industries, no country in the region is a net exporter. Millions of Kenyans are dependent on this industry and we must secure their future first,” Kiminini MP Chris Wamalwa, who represented Trans Nzoia County, said.

In a charged session, the legislators at one point proposed that the rescue model be adopted to hand over the management of the millers to the counties, arguing that agriculture was a devolved function and the factories were in their jurisdictions.

BUY SHARES

A section of farmers present at the summit were, however of the opinion that the privatisation should go on, saying it was the only way of making the factories competitive. They said they had been making savings since 2001 to buy shares and should be allowed to do so.

Atyang’ Atyang’ who leads one of the largest cooperatives supplying cane to Chemelil and Muhoroni factories, said that “making nucleus land communal would result in disintegration, killing the industry altogether.”

After an eight-hour debate, the governors successfully stopped the process, paving way for new talks whose progress will be revisited in March.

In the new bottom-up approach, consultation with farmers is expected to raise the issues they want addressed before representatives meet land and agriculture technocrats, after which the process will be scaled up to a national summit in which the Privatisation Commission will sit.

Talks began after Justice Edward Mureithi dismissed three petitions seeking to stop the sale of the millers but directed the warring parties to seek alternative dispute resolution mechanisms before seeking court intervention.

The judge said while there appeared to be weighty questions presented in court for interpretation of the Constitution with regard to the functions of the two levels of government, the Constitution allowed for smooth relations and alternative dispute resolution methods.