Privatisation process has been delayed for years by competing demands

Treasury Investment Secretary Esther Koimet

All eyes are on the Privatisation Commission as it divests the heavily indebted sugar millers in Western Kenya.

The privatisation process has been delayed for years by competing demands made by farmers’ groups and political leaders.

Yet, the stakes could not be higher than they are today after the country obtained a two-year moratorium on sugar imports from the Common Market for Eastern and Southern Africa (Comesa) region in October 2016.

Under the Comesa safeguards, Kenya is allowed to limit the entry of imported sugar to 350,000 tonnes needed to meet annual production deficit. The expiry of the safeguards would mean that sugar producers in the Comesa region would be free to export their produce to Kenya duty-free.

The result would be the collapse of the entire sugar industry - exacerbating poverty in the region. A look at past privatisation exercises reveal that the process is not a silver bullet that would fix all the problems facing the industry. Indeed, the millers sitting on vast tracts of land may prove attractive to private buyers, but for the wrong reasons.

Treasury Investment Secretary Esther Koimet was right to argue that the government would only release money to fund a holistic approach to save the industry.

 

Capital injection

Her argument is borne out the experience at Mumias Sugar Company (MSC), that is yet to be fully revived despite the Sh3 billion capital injection. The holistic approach Ms Koimett has in mind may include, but may not be limited to: First, the agricultural research institutions may be required to avail to farmers early maturing cane variety with high productivity.

Harvesting a single crop in two years should come to an end.

Counties in sugar growing areas should be encouraged to hire agricultural extension officers to assist cane farmers plant and care for the crop. The assistance would include proper use of fertiliser and chemicals. In the event that the sub-sector needs more officers, polytechnics and vocational training institutions may chip in.

Thirdly, the State should subsidise all the inputs at the recovery exercise. After all, these subsidies have been extended to farmers of other crops and there is no plausible explanation why cane growers are left out. The practice of cane farmers delivering their crop and then waiting for payment for months or years should end.

The sub-sector should consider producing sugar from crops other than cane. Farmers would make more money by embracing dairy farming and growing high-value crops.