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Construction of the Sh15 billion Kenya Brewery Ltd Kisumu plant has begun.
President Uhuru Kenyatta broke ground for the facility, which will be ready for use in 18 months.
The plant will employ 1,500 people directly, while 25,000 sorghum and cassava farmers in Western region will also benefit.
Senator keg, KBL's low-end beer, will account for 25 per cent of its production, pushing the total manufacture to nearly one million hectolitres (100 million litres) per year.
KBL Managing Director Jane Karuku clarified that the brewer will refurbish an old plant as opposed to setting up a new one.
"When KBL left Kisumu the equipment was also stripped off, these are the things we are bringing back, but on a larger scale. This will require some little expansion of the existing facility and replacement of weak areas," she told The Standard.
SOPHISTICATED TECHNOLOGY
The factory which ground to a halt in 2002 is expected to bring back economic vibrancy to Kisumu and the region, with direct and indirect jobs on the cards along the supply chain.
Ms Karuku said: "It is great news for Kenya's economy and particularly the people of Kisumu who have been asking when we will return... This investment constitutes 25 per cent of the total annual capital expenditure for Diageo, our parent company - a resounding statement of confidence in the Government.
The brewery is therefore expected to lift the demand for sorghum, which will in turn support small-scale farmers in the region. The additional earnings for farmers is expected to rise from the current Sh2.2 billion per year to Sh6 billion annually in the next 10 years.
A rise in the production of keg is expected to reduce consumption of illicit brews from 50 per cent to less than 20 per cent in a decade